A sum of money received at a future date is worth less than the same sum of money received today. Why? Explain this with an example.
What will be an ideal response?
A dollar obtainable sooner is worth more than a dollar obtainable later because of the interest that can be earned on that dollar in the interim. A person with $100 in his or her hand, if the annual rate of interest were 10 percent, could lend it out and receive $110 in a year’s time. For this reason, money received today is worth more than the same number of dollars received later.
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Positive externalities and high transaction costs make voluntary social cooperation difficult because they
A) are also obstacles to the effective working of democratically controlled governments. B) can be eliminated by government. C) can best be reduced by abandoning persuasion and voluntary cooperation. D) make government intervention necessary. E) make it easier for cartels to operate effectively.
Understanding how individual sectors of the economy will respond to changes in key economic variables gives us a better understanding of how the macroeconomy behaves
Indicate whether the statement is true or false