Which Interest Rate Column Would You Use from a Present

question 41

Multiple Choice

Which interest rate column would you use from a present value table or a future value table for 8% compounded quarterly?

• A)12%
• B)6%
• C)3%
• D)2%
• E)1%

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Definitions:

Income Elasticity

A measure of how the demand for a good or service changes in response to changes in consumers' income.

Inferior Good

A type of good for which demand decreases when the income of the consumer increases, inversely related to consumer income.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, in contrast to a normal good.

Inferior Goods

A good that has a negative income elasticity, so that as consumer income rises, the demand for the good falls.