Chapter 01 10e
1) The higher the interest rate,
A) the greater the present value of a future amount.
B) the smaller the present value of a future amount.
C) the greater the level of inflation.
D) the smaller the level of inflation.
2) If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and
$2,000 at the end of year two, then the present value of these cash flows is
A) $2,562.
B) $3,200.
C) $439.
D) $3,000.
3) Accounting profits are
A) total revenue minus total cost.
B) total cost minus total revenue.
C) marginal revenue minus total cost.
D) total revenue minus marginal cost.
4) Economic profits are
A) total revenue minus total cost.
B) marginal revenue minus marginal cost.
C) total revenue minus total opportunity cost.
D) total profits of the economy as a whole.
Version 1 1
1) The higher the interest rate,
A) the greater the present value of a future amount.
B) the smaller the present value of a future amount.
C) the greater the level of inflation.
D) the smaller the level of inflation.
2) If the interest rate is 10 percent and cash flows are $1,000 at the end of year one and
$2,000 at the end of year two, then the present value of these cash flows is
A) $2,562.
B) $3,200.
C) $439.
D) $3,000.
3) Accounting profits are
A) total revenue minus total cost.
B) total cost minus total revenue.
C) marginal revenue minus total cost.
D) total revenue minus marginal cost.
4) Economic profits are
A) total revenue minus total cost.
B) marginal revenue minus marginal cost.
C) total revenue minus total opportunity cost.
D) total profits of the economy as a whole.
Version 1 1
