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Related to the Economics in Practice on P

question 14

Multiple Choice

Related to the Economics in Practice on p.10: A study on the effect of roommates on college grades found that there were strong roommate effects on grade point average,effort in school,and fraternity membership.Which of the following is an example of a normative statement concerning this study?


Definitions:

Effective Rate

The actual interest rate of an investment or loan, taking into account the effects of compounding.

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal sum twice a year, causing the interest to earn interest.

Strip Bond

A type of bond where the principal and regular coupon payments have been separated and are sold individually as zero-coupon bonds.

Interest

The cost of borrowing money, typically expressed as a percentage of the borrowed amount, paid by the borrower to the lender.

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