At Which Interest Rate Is the Present Value of $145

question 153

Multiple Choice

At which interest rate is the present value of $145.80 two years from today equal to $125 today?

• A)2 percent
• B)4 percent
• C)6 percent
• D)8 percent

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Definitions:

Wage

The fixed regular payment, typically calculated on an hourly, daily, or piecework basis, received by an employee from an employer in exchange for work done.

Marginal Product

The marginal product is the additional output resulting from a one-unit increase in the use of a variable input, holding all other inputs constant.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers, leading to a balance without surplus or shortage.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers, resulting in a stable labor market condition.