Suppose your rich relative promises you the choice between $20,000 today and a delayed graduation gift of a $45,000 in four years time. Assume that the interest rate is 5 per cent. *Compare the present discounted value of the delayed gift versus the immediate gift.   *What is the interest rate that would equalize the present discounted value ofthe two gifts? What happens as interest rates become higher than this value?

If, at a given interest rate, the quantity of savings supplied is less than the quantity of investment demanded, what can we conclude? A) B) C) D) There is a shortage of savings and real interest rates will fall. There is a surplus of savings and real interest rates will fall. There is a surplus of savings and real interest rates will rise. There is a shortage of savings and real interest rates will rise. Show Transcribed Text Which of the following does NOT occur in an economy experiencing full employment? underemployment A) B) structural unemployment C) cyclical unemployment D) frictional unemployment S Show Transcribed Text If professors lose their positions at universities because of the widespread introduction of courses over the Internet, what would faculty members that remained unemployed be considered? underemployed structurally A) B) unemployed frictionally C) unemployed cyclically D) unemployed. S

When the interest rate falls, how does the opportunity cost of holding money and the quantity of money demanded change? Nominal interest rate (percent per year) 8 7- 1 Draw an arrow on the MD curve to show the effect of a rise in the intérest rate above 5 percent a year. Label it 1. 5- Draw an arrow on the MD curve to show the effect of a fall in the interest rate below 5 percent a year. Label it 2. 4- 3- When the interest rate falls, other things remaining the same, the opportunity cost of holding money and MD the O A. falls; quantity of money demanded increases B. rises; quantity of money demanded decreases 3.0 C. falls; demand for money increases 2.6 2.7 2.8 2.9 3.0 3.1 3.2 3.3 3.4 Quantity of money (trillions of dollars) OD. rises; demand for money decreases 70°F Sunny

Suppose that the interest rate is 5 percent. Enter your answers rounded to 2 decimal places. A. What is the future value of $100 four years from now? $ How much of the future value is total interest? $ b. By how much would total interest be greater at an interest rate of 7 percent than at an interest rate of 5 percent? $