The Fact That People Prefer Present Consumption to Future Consumption

question 16

Multiple Choice

The fact that people prefer present consumption to future consumption results in

• A) an upsloping supply of loanable funds curve.
• B) a downsloping demand for loanable funds curve.
• C) a downsloping supply of loanable funds curve.
• D) an upsloping demand for loanable funds curve.

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Definitions:

Hurdle Rate

The minimum acceptable rate of return on an investment that a manager or company would consider in order to pursue the project.

Accounting Rate of Return

A financial ratio that measures the expected profit from an investment compared to its initial cost.

After-Tax Net Income

The profit remaining after all operating expenses, including taxes, have been deducted from total revenue.

Annual Investment

The amount of money invested in a particular asset or project on a yearly basis.