« previous next »

Author Question: What happens to the present value of 1 one year from now if the market rate of interest falls? ... (Read 71 times)

Frost2351

  • Hero Member
  • *****
  • Posts: 557
on: Jun 29, 2018
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
Reply #1 on: Jun 29, 2018
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
« previous next »
 

Did you know?

Warfarin was developed as a consequence of the study of a strange bleeding disorder that suddenly occurred in cattle on the northern prairies of the United States in the early 1900s.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

A serious new warning has been established for pregnant women against taking ACE inhibitors during pregnancy. In the study, the risk of major birth defects in children whose mothers took ACE inhibitors during the first trimester was nearly three times higher than in children whose mothers didn't take ACE inhibitors. Physicians can prescribe alternative medications for pregnant women who have symptoms of high blood pressure.

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four Table 6.1 illustrates the main regime types and their differences. It breaks the regimes into four
Top Ten States Ranked by Rate or Reported Bacterial STI Cases in 2011 Top Ten States Ranked by Rate or Reported Bacterial STI Cases in 2011
Explain the myogenic autoregulation of the glomerular filtration rate Explain the myogenic autoregulation of the glomerular filtration rate
Markets and Institutions Market Story Problem Markets and Institutions Market Story Problem
What single payment one year from now would be economically equivalent to payments of $1,000 ... What single payment one year from now would be economically equivalent to payments of $1,000 ...
Video: Virtual Tour of the Heart

For a complete list of videos, visit our video library