Which of the Following Decisions Would Involve the Use of the Future

question 13

Multiple Choice

Which of the following decisions would involve the use of the future value of a $1 ordinary annuity table?

• A) Your brother buys your car and offers to pay you $500 now or $1,500 in two years.
• B) You win a lawsuit and are offered a lump-sum payment today of $100,000 or $15,000 a year for 20 years.
• C) Your father and mother wish to deposit enough money on the date of your high school graduation to enable you to take a $7,000 cruise when you graduate from college in 4 years.
• D) You want to have $1,000,000 in order to retire at age 55, but need to know how much you will need to deposit each year from now until your 55th birthday.

Understand the concept of potential GDP and how high unemployment affects it.

Comprehend the relationship between monetary policy effectiveness and its lags.

Grasp how expectations (adaptive and rational) influence government policy and economic outcomes.

Recognize how wage increases relative to labor productivity affect price levels.

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Definitions:

Valuable Necklace

A piece of adornment, often made of precious metals and stones, considered to have significant monetary worth.

Imposter Rule

A legal principle that protects the drawer of a negotiable instrument from being held liable to an impostor or in cases of fraud, provided certain conditions are met.

Presentment Warranties

Legal assurances given when a negotiable instrument (like a check) is presented for payment, concerning the authenticity of the document and the rights of the presenter.

Drawer Is Unauthorized

A statement indicating that the person who has made or drawn a cheque (the drawer) did not have the authority to do so, potentially rendering the cheque invalid.