Explain the Difference Between the Effective Annual Rate (EAR)and the Annual

question 105

Essay

Explain the difference between the effective annual rate (EAR)and the annual percentage rate (APR).Of the two,which one has the greater importance and why?

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Definitions:

Common Resources

Resources that are not owned by anyone, cannot be easily limited, and are available for use by more than one person or group.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they can be consumed by one individual without preventing the consumption by others, and without leading to a decrease in available quantity.

Inefficient Allocation

When resources are not optimally distributed, leading to a situation where it is possible to improve at least one person's well-being without worsening any other's situation.

External Effects

Consequences of economic activities on unrelated third parties; can be positive (benefits) or negative (costs).