The Principle of Compounding Implies That

question 2

Multiple Choice

The principle of compounding implies that:

• A) we should diversify enough so that the returns on different stocks will be the same at some time in the future.
• B) any difference in the rate of investment returns will stay constant over time.
• C) a small difference in the rate of investment returns makes no difference over a long period.
• D) a small difference in the rate of investment returns can have a large difference over a long period.

Understand the principles of reinforcement size, immediacy, and contingency.

Identify strategies to reinforce desirable behaviors and reduce or eliminate undesirable behaviors.

Understand the concept and significance of kaizen in organizational improvement.

Recognize the role of consequences in behavior modification.

---

Definitions:

Automatic Stabilizer

Economic policies and programs, such as unemployment insurance and taxation, that automatically adjust to counteract economic fluctuations without the need for government intervention.

Money Market

A section of the financial market where short-term financial assets with high liquidity are traded.

Interest Rate

The amount charged by lenders as a percentage of the principal, or the amount earned on deposits over a specified period.

Equilibrium Value

The point at which the quantity of a good or service demanded equals the quantity supplied, resulting in market stability.