Assuming an Interest Rate of 6%,if You Invest a Lump

question 50

Multiple Choice

Assuming an interest rate of 6%,if you invest a lump sum of $6,500 now,the balance of your investment in 7 years will be closest to

• A)$45,500.
• B)$11,642.
• C)$36,283.
• D)$9,776.

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Definitions:

Utility Function

An economic tool used to encode a consumer's preference orderings over a set of alternatives into a real-valued function. (Duplicate rephrase)

Income

Funds obtained regularly as a result of employment or from returns on investments.

Cobb-Douglas Utility Function

A form of utility function that represents preferences of consumers for various goods, showcasing how they allocate their spending based on the utility derived from each good, typically in the form of \(U(x,y) = x^a y^b\) where \(x\) and \(y\) are quantities of goods and \(a\) and \(b\) are positive constants.

Inverse Demand Function

A mathematical function that expresses price as a function of quantity demanded, illustrating how the price necessary to sell a given quantity changes.