The Higher the Interest Rate Assumed,the

question 146

Multiple Choice

The higher the interest rate assumed,the

• A)higher the present value of an ordinary annuity.
• B)more one must deposit today to accumulate to a desired sum.
• C)lower the future value of a sum invested in the bank today.
• D)lower the present value of a sum due in the future.

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Definitions:

Allowance

An amount of money given regularly for a specific purpose, often by a parent to a child or by an employer to an employee.

Preferences

The subjective tastes and choices of consumers, which guide their decision-making in selecting among alternatives.

Laspeyres Price Index

A measure of the change in the overall price of a specific set of goods and services over time, using the quantities of the goods and services purchased in the base period.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.