For Economists, Statements About the World Are of Two Types

question 75

Multiple Choice

For economists, statements about the world are of two types:

• A) assumptions and theories.
• B) true statements and false statements.
• C) specific statements and general statements.
• D) positive statements and normative statements.

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Definitions:

Present Value of An Annuity

The current worth of a series of future payments or receipts, discounted at a specific interest rate.

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account to analyze the profitability of investments.

Profitability Index

A financial metric that measures the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Annuity

A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.