Author Question: What happens to the present value of 1 one year from now if the market rate of interest falls? ... (Read 26 times)

Frost2351

  • Hero Member
  • *****
  • Posts: 557
What happens to the present value of 1 one year from now if the market rate of interest falls? Explain.
 
  What will be an ideal response?

Question 2

Contractionary monetary policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.
 
  A) higher; higher B) higher; lower C) lower; lower D) lower; higher



durant1234

  • Sr. Member
  • ****
  • Posts: 338
Answer to Question 1

If the interest rate falls, the present value of 1 one year from now will increase. If the interest rate is lower, the amount you would have to set aside today to end up with 1 one year from now would be higher.

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

Medication errors are three times higher among children and infants than with adults.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

A strange skin disease referred to as Morgellons has occurred in the southern United States and in California. Symptoms include slowly healing sores, joint pain, persistent fatigue, and a sensation of things crawling through the skin. Another symptom is strange-looking, threadlike extrusions coming out of the skin.

Did you know?

Immunoglobulin injections may give short-term protection against, or reduce severity of certain diseases. They help people who have an inherited problem making their own antibodies, or those who are having certain types of cancer treatments.

For a complete list of videos, visit our video library