Mike Has Just Graduated from College and Is Now Looking

question 83

Multiple Choice

Mike has just graduated from college and is now looking for a job, but has not yet found one. This causes the unemployment rate to ________ and the labor-force participation rate to ________.

• A) increase; decrease
• B) stay the same; stay the same
• C) increase; increase
• D) increase; stay the same

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value.

Payback Period

The time it takes for an investment to generate an amount of income or cash flows to recover the initial capital outlay.

Incremental Cost Approach

A method used to analyze the financial impact of additional costs incurred when making business decisions.

Discount Rate

In discounted cash flow (DCF) analysis, this rate is applied to calculate the present value of anticipated cash flows.