Chapter 14 – Rent, Interest, and Profit
53. Refer to the above table representing Kara’s bank account. Assuming that $2000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, the interest rate Kara is receiving on her account:
54. If Kelly deposits $10,000 into an account that pays 8 percent interest, compounded
annually, and she makes no further deposits or withdrawals, how much will Kelly have in her
account at the end of 5 years?
55. “Present value” refers to the:
Chapter 14 – Rent, Interest, and Profit
56. The value today of a sum of money to be received in the future is referred to as:
57. The amount to which some current amount of money will grow as interest compounds
over time is known as:
58. The “future value” of a sum of money refers to:
Chapter 14 – Rent, Interest, and Profit
59. Refer to the above table representing Darcy’s bank account. Assuming that $1000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, how much interest would Darcy receive in Year 2 only?
60. Refer to the above table representing Darcy’s bank account. Assuming that $1000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, what interest rate is being paid on Darcy’s account?
Chapter 14 – Rent, Interest, and Profit
61. Refer to the above table representing Darcy’s bank account. Assuming that $1000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, the $1191 value at the end of year 3 represents the:
62. Refer to the above table representing Darcy’s bank account. Assuming that $1000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, what is the value for cell D?
Chapter 14 – Rent, Interest, and Profit
63. Refer to the above table representing Darcy’s bank account. Assuming that $1000 was
deposited into her account at the beginning of year 1, and no further deposits or withdrawals
were made, which cell(s) represents the future value of the initial deposit if the money
remains in the account for two years?
64. Other things equal, interest rates are:
65. Which of the following generalizations is false? Other things equal:
Chapter 14 – Rent, Interest, and Profit
66. The pure rate of interest is approximated by the:
67. A lower equilibrium interest rate:
68. The equilibrium interest rate:
Chapter 14 – Rent, Interest, and Profit
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69. The equilibrium interest rate:
70. Other things equal, an increase in the equilibrium interest rate will:
71. Changes in the equilibrium interest rate will:
Chapter 14 – Rent, Interest, and Profit
72. The real rate of interest is the interest rate:
73. The real interest rate can be estimated by:
74. In year 1 the price level is constant and the nominal rate of interest is 6 percent. But in
year 2 the inflation rate is 3 percent. If the real rate of interest is to remain at the same level in
year 2 as it was in year 1, then in year 2 the nominal interest rate must:
Chapter 14 – Rent, Interest, and Profit
75. The XYZ Corporation can make a real (inflation-adjusted) return on an investment of 9
percent. The nominal rate of interest is 13 percent and the rate of inflation is 7 percent. We
can conclude that the:
76. Which of the following is incorrect?
77. Suppose that in some year nominal interest rates are less than the rate of inflation. This
means that:
Chapter 14 – Rent, Interest, and Profit
78. In making an investment decision a business firm is most interested in the:
79. Effective usury laws cause:
80. Usury laws:
Chapter 14 – Rent, Interest, and Profit
81. Effective usury laws cause:
82. Effective usury laws:
83. A major purpose of usury laws is to make more funds available to low-income borrowers.
Economic analysis suggests that usury laws: