If a person saves 1,000 . how much will she have at the end of three years if the market interest rate is 6 percent?
a. 1,060
b. 1,135
c. 1,156
d. 1,191
e. 1,600
QUESTION 2If the exchange rate changes from 75 cents per euro to 1 per euro, the euro
a. appreciated, since its value has increased
b. appreciated, since the price of U.S. dollars has increased
c. appreciated, making U.S. goods more expensive in Euros
d. depreciated, since its value has declined
e. depreciated, since its value has increased
QUESTION 3The Great Homebody Nationwide Sweepstakes promises its winners a choice between 200,000 now or 120,000 now and 100,000 next year. The winners should take the 200,000 now
a. no matter what the interest rate is
b. no matter what the interest rate is, if their rate of time preference is high
c. no matter what the interest rate is, if their rate of time preference is low
d. only if the interest rate is above 25 percent
e. only if the interest rate is below 25 percent
QUESTION 4If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the Euro has
a. appreciated, since its value has increased
b. appreciated, since the price of U.S. dollars has increased
c. appreciated, making U.S. goods cheaper in Euros
d. depreciated, since its value has declined
e. depreciated, since its value has increased
QUESTION 5You buy a bond for 1,000 from the federal government, which guarantees that you will receive 70 a year forever. Thus, 7 percent was the market rate of interest when you bought the bond. Suppose that immediately after you buy the bond, the market rate of interest goes to 10 percent. The market value of your bond
a. could be more or less than 1,000
b. will be less than 1,000
c. will be more than 1,000
d. will remain unchanged
e. will be 1,000