Which of the Following Is True About Perpetuities

question 5

Multiple Choice

Which of the following is true about perpetuities?

• A)If two perpetuities have the same present value and the same interest rate, they must have the same cash flows.
• B)All else equal, the value of a perpetuity is higher when the periodic cash flow is higher.
• C)All else equal, the value of a perpetuity is higher when the interest rate is lower.
• D)All of the above are true statements.

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Definitions:

Federal Budget Deficits

Occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.

Aggregate Demand

The overall requirement for goods and services across an economy, evaluated at one price level and over a specified duration.

Wartime Borrowing

The process of governments taking on debt during times of war to finance military operations and support the economy.