If the interest rate increases from 5 percent to 7 percent, the present value of a future payment
A) rises.
B) falls.
C) is unaffected.
D) might either rise or fall.
B
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Consider a downward-sloping demand curve. When the price of a normal good decreases, the income and substitution effects
A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work in opposite directions and quantity demanded increases. D) work in opposite directions and quantity demanded decreases.
Which of the following statements is false?
A) For purposes of computing GDP, the purchases of new residential housing are considered investment although it is undertaken by the household sector. B) Consumption includes spending on durable goods but not spending on services. C) Investment includes fixed investment but not inventory investment. D) b and c