Author Question: Homer has been saving to buy a new car in five years and expects that the car of his dreams will ... (Read 89 times)

jilianpiloj · **on:** Jun 29, 2018

Homer has been saving to buy a new car in five years and expects that the car of his dreams will cost 35,000.

If the interest rate is 8 percent per year, how much money should Homer have in his bank account today in order to have enough money to buy the car in 5 years? A) 1,852.28
B) 22,055.94
C) 23,820.41
D) 25,726.04

Question 2

If Bill's income increases from 80,000 per year to 91,000 per year and he consumes pickup trucks and lamb chops with his money, Bill's budget line shifts outward and the increase in income means he can consume more trucks and more lamb.

Is this statement true or false? Briefly explain your answer.

tjayeee · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The statement is true. The increase in Bill's income shifts his budget line outward and enables Bill to consume more trucks and more lamb chops.