« previous next »

Author Question: Interest rates are positive because inflation makes purchases more expensive in the future than ... (Read 30 times)

abc

  • Hero Member
  • *****
  • Posts: 543
on: Jul 1, 2018
Interest rates are positive because inflation makes purchases more expensive in the future than today.
 
  Indicate whether the statement is true or false

Question 2

If the interest rate is positive, the future value of an interest bearing investment is always larger than the present value.
 
  What will be an ideal response?


Anonymous

  • Sr. Member
  • ****
  • Posts: 317
Reply #1 on: Jul 1, 2018
Answer to Question 1

False. Even if inflation were zero, interest rates would be positive since people prefer present consumption to future consumption.

Answer to Question 2

True. FV = PV  (1 + i)t. If the interest rate is positive, the future value will always be greater than the present value.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Street names for barbiturates include reds, red devils, yellow jackets, blue heavens, Christmas trees, and rainbows. They are commonly referred to as downers.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

Did you know?

In 2006, a generic antinausea drug named ondansetron was approved. It is used to stop nausea and vomiting associated with surgery, chemotherapy, and radiation therapy.

Did you know?

Atropine, along with scopolamine and hyoscyamine, is found in the Datura stramonium plant, which gives hallucinogenic effects and is also known as locoweed.

Did you know?

Cucumber slices relieve headaches by tightening blood vessels, reducing blood flow to the area, and relieving pressure.

Positive and negative selection during T-cell development. Positive and negative selection during T-cell development.
A latex agglutination test for rheumatoid factor. A positive control at 1. A negative control at 2. ... A latex agglutination test for rheumatoid factor. A positive control at 1. A negative control at 2. ...
Bulk flow by positive pressure (pressure Bulk flow by positive pressure (pressure
Positive and Negative Reinforcement Positive and Negative Reinforcement
A simple pendulum of length 2.5 m m makes 5.0 complete swings in 16 s s . What is the ... A simple pendulum of length 2.5 m m makes 5.0 complete swings in 16 s s . What is the ...
Future Value Formula Future Value Formula
Video: Regulation of GFR: autoregulation via tubuloglomerular feedback, neural & hormonal regulation

For a complete list of videos, visit our video library