Suppose You Win a Small Lottery and You Are Given

question 31

Multiple Choice

Suppose you win a small lottery and you are given the following choice: You can receive (1) an immediate payment of $10,000 or (2) two annual payments,each in the amount of $5,200,with the first payment coming one year from now,and the second payment coming two years from now.You would choose to take the immediate payment of $10,000 if the interest rate is

• A)2 percent,but not if the interest rate is 1 percent.
• B)3 percent,but not if the interest rate is 2 percent.
• C)4 percent,but not if the interest rate is 3 percent.
• D)5 percent,but not if the interest rate is 4 percent.

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Definitions:

Foreign Official

A representative or an employee of a government or governmental body of another country.

Nontariff Barriers

Restrictions that countries use to control the amount of trade across their borders, not including the use of tariffs, such as quotas and embargoes.

Competitive Advantage

A condition that allows a company or country to produce goods or services at a lower price or in a more desirable fashion for customers than competitors.

Eurozone

A geographical and economic region consisting of European Union countries that have adopted the euro as their official currency.