The future value of a dollaras the interest rate increases andthe longer themoney remains investedSelect one:a. decreases; increasesb. decreases; decreasesc. increases; increases21d. increases; decreases

Interest rate: It is the amount charged by a borrower on the amount loaned.

The future value of a dollar as the interest rate increases and money remains invested the longer the Select one: a. decreases; increases b. decreases; decreases c. increases; increases 21 d. increases; decreases

The future value of a dollar as the interest rate increases and money remains invested the longer the Select one: a. decreases; increases b. decreases; decreases c. increases; increases 21 d. increases; decreases

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 1QR

See similar textbooks

Related questions

Q: If interest rates in the economy rise over time this is: O Good for lenders but bad for borrowers…

A: If the interest rate is rising over time, it is good for lenders but bad for borrowers.

Q: 8. Mr. Erwin is a new researcher from New Ono University. He wants to do research on investment in…

A: Econometrics is the quantitative use of factual inductions, financial theory, and numerical models…

Q: Refer to Figure 8.8. The amount of planned investment if the interest rate rises from 4% to 8%.

A: If the interest rate is 4%, the planned investment is 275 and if the interest rate is 8%, the…

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: The budget constraint for a two-period consumption is : [Ct+Ct+1/rt+1]=[Yt+Yt+1/rt+1] Ct is the…

Q: Investors become optimistic with respect to the economic situation. Analyze its effect on interest…

A: The scinario given in the question can be understood with the help of loanable funds market.

Q: 8 4 125 275 Planned investment (billions of dollars) Figure 8.8 Refer to Figure 8.8. The amount of…

A: Investment in economics means an increase in the capital stock of a firm for example buying a new…

Q: Suppose Neha is a sports fan and buys only baseball caps. Neha deposits $3,000 in a bank account…

A: Real interest rate is an interest rate that has been adjusted to remove the effects of inflation.

Q: A consumer is considered to be saving if she: O All of the above. O Buys stock in the stock market.…

A: Since you asked multiple questions, we will solve the first question for you. If you want any…

Q: Q3. d) Suppose the interest rate rises. Then you will you save more while wor Select one: True False

A: An interest rate is basically determined as the certain value of the principal amount of overall…

Q: Smith consumes all his income. Draw his consumption and saving schedule.

A: Consumption and saving The use of products and the services by households is referred to as…

Q: Circular flow of income. Explain: 1. Household 2. Leakages. 3. MPC

A: The circular flow of income, also known as circular flow, is an economic model in which important…

Q: arginal Propensities to Consume and to Save Disposable Income Consumption Saving MPC MPS…

A: The income which is not spent on the consumption is the savings. The marginal propensity to consume…

Q: You initially invest $500 in a savings account that pays a yearly interest rate of 3%. (a) Write a…

A: We are going to understand the exponential and decade growth factor to answer this question.

Q: When someone loses his job and has no income: His consumption becomes negative but his savings…

A: Saving is that part of consumer income which are not to be consumed. That is Saving = Income -…

Q: Households use money on which of the following ways? A) wages, saving, spending B) Public Goods…

A: Households use money on different ways.

Q: Define disposable income

A: Disposable income, otherwise called dispensable individual income (DPI), is the measure of cash that…

Q: How do changes in interest rate affect expected consumption? Interprete the effect of interest rate…

A: Precautionary Savings: This is a part of saving that is saved for consumption or use at a time of…

Q: Q.7 TVC changes: (a) First increases at decreasing rate and then at increasing rate (b) It increases…

A: # During a given period of time, with the change in total production the change in expenses is…

Q: A friend asks you to explain the difference between saving and investment. Explain the difference.

A: The individuals and households earn income from various sources which is then used by them for…

Q: value of closing stock is $50 million and the value of opening stock is $25 million Find the value…

A: Given Information Value of closing stock = $50 millionValue of opening stock = $25 Million

Q: explains interest rate and its determinants. Please explain is 3 paragraph

A: The policy which includes changes in the interest rate and open market operations to stabilize the…

Q: n increase in interest rates will increase economic investment. 1) True 2) False b) The…

A: Answer a) Interest rates are fluctuated by the Federal bank to stabilize economic growth and…

Q: Calculate MPS if change in savings is $1300 and the change in income is $2300

A: The data presented in the question above is:- Change in savings = $1300 Change in income = $2300…

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: The budget line/constraints for a two-period consumption is given by [Ct+Ct+1/rt+1]=[Yt+Yt+1/rt+1]…

Q: a. Incomes and expenditures b. None of these c. Prices and incomes d. Expenditures and Prices e…

A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…

Q: 8. Mr. Erwin is a new researcher from New Ono University. He wants to do research on investment in…

A: The 5 main steps of econometrics methodology are given below : Statement of theory or hypothesis…

Q: Why is savings equal to investment

A: Saving is the portion is income that is not used in consumption and thus does not include in income…

Q: Mathematically derive slope of IS curve. Prove that if investment does not depend oni interestrate,…

A: The IS curve shows the negative relationship between interest rate and real GDP where the goods…

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: At C,Consuption Today=$1000At B,Consumption today=$2000Now, If an individual increases its…

Q: If sales is $100,000 and the change in stock is 40% of sales Calculate value of output

A: Sales are part of consumption expenditure. Change in stock is part of investment expenditure.

Q: A.Imagine you own a company and invest in it from your retained profits and not borrowed funds, will…

A: A. Investment decision refers to the process as to how the funds of a firm are invested to ensure…

Q: If consumers decide to increase saving, then C decreases, r decreases, I increases, and Y:

A: Money is placed aside for future use or accumulation over a defined length of time through the act…

Q: Cindy takes a summer job and earns an after-tax income of $4,500. Her living expenses during the…

A: After-tax income is $4500 Expenses are $1000

Q: Why is it important to follow the FIFO in doing and INVENTORY?

A: Both the raw materials utilised in manufacturing and the final commodities that are ready for sale…

Q: If the MPC is 0.31 find the value of the MPS

Q: What is the relationship between the rising cost of living and low-income communities’ savings in…

A: The cost of living is referred as to the level of price or cost of purchasing goods and services.…

Q: I percent. It follows that Select one: O a. the dollar value of savings increased at 2 percent, and…

A: Inflation is the rate at which the value of a currency is falling and, consequently, the general…

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: As per given information, we can say Y1=$1000, Y2=$2000, r=10%=0.01 The intertemporal budget…

Q: Explain why an increase in the interest rate reduces the amount of residential investment

A: Interest rates impact the level the residential investment.

Q: Question 31 This person earns $1000 of income today and $2000 income next year. Point C represents…

A: Borrowing allows an individual to consume more they can afford using their current income. However,…

Q: 1. Would you consider spending to make a school or an office building earthquake-proof a good…

A: 1 In order to create the earthquake resistant in the building and the schools is to build an…

Q: it is given that the ratio of APS to APC is 2/7 Calculate the ratio of Consumption to savings

A: # APS is also known as average propensity to save and it is given by the ratio of savings to income…

Q: If savings are at $1300 and income is worth $2200, what would the value of consumption be

A: According to neoclassical economists, ingestion serves as the ultimate goal of economic activity; as…

Q: Mathematically derive slope of IS curve. Prove that if investment does not depend on interest rate,…

A: The slope of IS curve tells us about how a change in interest rate impacts the disposable income ,…

Q: decreasec increased better trai a decreas

A: demand for labor is derived from the output which a firm demand.

Q: Calculate the value of change in stocks if it's given that:- GVAFC = $60 million Sales = $400…

A: We need to calculate the value of change in stock in the economy. According to the question, the…

Q: Make sure to show your work to get credit. 1. Assume: Yd = $194,000 b = .90 a = $ 8,000 A)What is…

A: Yd = 194,000 b = 0.90 a = 8,000

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: Given, Current income : $1000.Future income :$2000.

Question

The future value of a dollar
as the interest rate increases and
the longer the
money remains invested
Select one:
a. decreases; increases
b. decreases; decreases
c. increases; increases
21
d. increases; decreases

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Investors sometimes fear that a high-risk investment is especially likely to have low returns. Is this fear true? Does a high risk mean the return must be low?
Edna is living in a retirement home where home where most of her needs are taken care of, but she has some discretionary spending. Based on the basket of goods in Table 22.5, by what percentage does Ednas cost of living increase between time 1 and time 2
Which of the following is a major factor in determining an individual's supply of savings? A: Patience B: Investment C: GDP
A. Given: C = 700 + .80 (1- t)Y, t=0.25 I = 210 -75i; G= 1000; TR=100 L= 0.20Y- 40i ; M/P = 800 Compute: 1. The equilibrium income and the equilibrium interest rate
assume elsa has current income of $50000 and expects income of $60000 next period. interest rate is 6% elsa desires to have the same amount of consumption expenditure during both periods. in the two period certainty framework, determine how much elsa's expenditures are during each period is elsa a saver or spender
37- What is the ratio of the change in savings to the change in income called? a) MRI B) APS NS) MPS D) NS TO) cY
Mary has income of $2000 today and $1000 tomorrow. She can lend and borrow at an interest rate of 20%. There is 10% inflation. Her preferences for intertemporal consumption are represented by the following utility function u(c, c) = min{c1, 2c2} (a) What is her optimal consumption bundle?
Sssistkace with the following question please show all working in steps so I can follow. Appreciate the help. Now suppose the G rises by 1,000. Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r ————————————————- a. Compute private saving, public saving, and national saving. b.Calculate the equilibrium interest rate.
Calculate the value of change in stocks if it's given that:- GVAFC = $60 million Sales = $400 million Purchase of raw material = $250 million Excise duty = $30 million Sales tax = $20 million
In saving drepped sharply in the economy, what would be likely to happen to investiment? Why
A college professor is planning for his retirement years. His utility function is ?(?t , ?r ) = 3c t 0.5+2cr0.5 where ct represents his consumption today (period 1), his active years of teaching, and cr represents his consumption in his retirement years (period 2). During his active years of teaching, he makes a total of ₺3 million, while in his retirement years his total income is ₺1 million. He can borrow or lend at an interest rate of 25% between the two periods. Write an equation that describes the professor’s budget assuming he will spend all his income during his lifetime. If the professor chooses neither to borrow nor to lend during his active years, what will be his marginal rate of substitution between his consumption today and his retirement years? If the professor aims at maximizing his utility, how much does he consume in each period (use the Lagrangian method)? Does he save for his retirement years? If so, how much? At what interest rate would the professor…
3. If the consumption function is C= $200 billion + 0.9Y, a) How much do consumers spend with income of $3 trillion? b) How much do they save?