If the Annual Interest Rate Is 4 Percent, a Consumer

question 190

Multiple Choice

If the annual interest rate is 4 percent, a consumer who spends $100 today

• A)will have to pay back $104 to the bank
• B)would have to pay $104 next year to get the same goods
• C)will receive $96 from the bank next year
• D)would have to pay $96 next year to get the same goods
• E)is giving up the ability to spend $104 on goods next year

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Definitions:

North American Potlatch

A ceremonial feast or gathering among indigenous peoples of the Pacific Northwest Coast of Canada and the United States, characterized by the distribution of gifts to affirm or establish status and prestige.

Generalized Reciprocity

A mode of exchange in which the value of the gift is not calculated, nor is the time of repayment specified.

Balanced Reciprocity

A mode of exchange in which the giving and the receiving are specific as to the value of the goods and the time of their delivery.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, with little government intervention.