Flow of Funds - AP Macroeconomics
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A consumer who discounts future payments at a rate of 10% per year will be willing to pay what amount for an asset that will pay $5000 in 3 years?
A consumer who discounts future payments at a rate of 10% per year will be willing to pay what amount for an asset that will pay $5000 in 3 years?
The consumer's discount rate tells us what return on the investment the consumer must make every year in order to consider the asset worth buying. To determine the cost necessary to make the return worthwhile use the present discount formula:
The consumer's discount rate tells us what return on the investment the consumer must make every year in order to consider the asset worth buying. To determine the cost necessary to make the return worthwhile use the present discount formula:
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A consumer who discounts future payments at a rate of 10% per year will be willing to pay what amount for an asset that will pay $5000 in 3 years?
A consumer who discounts future payments at a rate of 10% per year will be willing to pay what amount for an asset that will pay $5000 in 3 years?
The consumer's discount rate tells us what return on the investment the consumer must make every year in order to consider the asset worth buying. To determine the cost necessary to make the return worthwhile use the present discount formula:
The consumer's discount rate tells us what return on the investment the consumer must make every year in order to consider the asset worth buying. To determine the cost necessary to make the return worthwhile use the present discount formula:
Compare your answer with the correct one above
A depreciation in the value of a nation's currency will lead to what?
A depreciation in the value of a nation's currency will lead to what?
A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports.
A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports.
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A trade surplus results from a country having __________.
A trade surplus results from a country having __________.
Net imports describe all goods brought into a country through trade, and net exports describe all goods sold to foreign countries. A trade surplus describes any situation in which net exports are greater than net imports. A trade surplus is a target for most nations.
Net imports describe all goods brought into a country through trade, and net exports describe all goods sold to foreign countries. A trade surplus describes any situation in which net exports are greater than net imports. A trade surplus is a target for most nations.
Compare your answer with the correct one above
A depreciation in the value of a nation's currency will lead to what?
A depreciation in the value of a nation's currency will lead to what?
A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports.
A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports.
Compare your answer with the correct one above
A trade surplus results from a country having __________.
A trade surplus results from a country having __________.
Net imports describe all goods brought into a country through trade, and net exports describe all goods sold to foreign countries. A trade surplus describes any situation in which net exports are greater than net imports. A trade surplus is a target for most nations.
Net imports describe all goods brought into a country through trade, and net exports describe all goods sold to foreign countries. A trade surplus describes any situation in which net exports are greater than net imports. A trade surplus is a target for most nations.
Compare your answer with the correct one above
The real interest rate can be approximated by the Fisher equation: 
What is the exact formula for the real interest rate?
The real interest rate can be approximated by the Fisher equation:
What is the exact formula for the real interest rate?
The real interest rate is defined as the nominal appreciated value of assets divided by the new price level of the assets. The nominal appreciated value is simply 
, while the new price level is equal to 
. This gives the real appreciated value of assets. We then subtract 1 to get the real interest rate.
Example: 
(according to the Fisher equation)
The Fisher equation comes close, but is not actually correct.
The real interest rate is defined as the nominal appreciated value of assets divided by the new price level of the assets. The nominal appreciated value is simply
Example:
The Fisher equation comes close, but is not actually correct.
Compare your answer with the correct one above
The real interest rate can be approximated by the Fisher equation:
What is the exact formula for the real interest rate?
The real interest rate can be approximated by the Fisher equation:
What is the exact formula for the real interest rate?
The real interest rate is defined as the nominal appreciated value of assets divided by the new price level of the assets. The nominal appreciated value is simply , while the new price level is equal to . This gives the real appreciated value of assets. We then subtract 1 to get the real interest rate.
Example: (according to the Fisher equation)
The Fisher equation comes close, but is not actually correct.
The real interest rate is defined as the nominal appreciated value of assets divided by the new price level of the assets. The nominal appreciated value is simply
Example:
The Fisher equation comes close, but is not actually correct.
Compare your answer with the correct one above