Normative Conclusions

question 27

Multiple Choice

Normative conclusions

• A)come from positive analysis alone.
• B)are based on ignorance of positive analysis.
• C)involve value judgments.
• D)reflect the economist's role as scientist.

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Definitions:

Maturity Value

For an interest-bearing note, it is the sum of the face value (principal) and the interest dollars: MV = P + I.

360-Day Year

An accounting assumption that simplifies interest calculations by using a year composed of twelve 30-day months.

Leap Years

Years that contain 366 days instead of the usual 365, with an extra day added to February, occurring every four years to maintain the calendar year's alignment with the Earth's revolutions around the Sun.

Interest Computation

The process of calculating the amount of interest due on a loan or investment based on the principal amount, rate, and time.