Answer the following statements true (T) or false (F)
1. The terms "economic investment" and "financial investment" can be used synonymously.
2.The "time value" of money is based on the fact that prices may increase over time.
3. The compound interest formula states that if X dollars is invested today at an interest rate i and allowed to grow for t years, it will become X(1 + i)(t) dollars in t years.
4.You deposit $5,000 into a 10-year bank CD that pays 6.5% annual compound interest rate. When the CD matures in 10 years, you will get more than $9,000 from it.
5.After 4 years, a $5,000-investment earning 6% annual interest rate will be worth more than a $6,000-investment earning 1% annual interest
1. FALSE
2. FALSE
3. FALSE
4. TRUE
5. TRUE
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Explain what happens to the money supply, interest rates, investment spending and GDP when the Fed makes open market bond purchases
What will be an ideal response?
If the quantity of money supplied is greater than the quantity of money demanded, then the
A) price of financial assets falls. B) money supply decreases. C) nominal interest rate rises. D) nominal interest rate falls. E) price level falls.