In Time-Value of Money Analysis, an Increase in Interest Rates

question 234

Multiple Choice

In time-value of money analysis, an increase in interest rates

• A) raises the present value of a future amount.
• B) lowers the present value of a future amount.
• C) lowers the future value of a present amount.
• D) has no effect on present or future amount.

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Definitions:

General Price

The standard or average cost of goods or services available in the market to all consumers.

Electronic Goods

Products that use electric power for their operation, including consumer electronics like phones, TVs, and computers.

Law Of One Price

The economic theory stating that in an efficient market, identical goods must have only one price.

Trade Barriers

Restrictions set by a government to control international trade, often to protect domestic industries.