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ExtremeBDS [4]
3 years ago
6

Everyone uses money, and it is important to understand what factors affect the cost of money. Consider the following scenario: A

friend comes to you and asks you to invest in his business instead of investing in Treasury bonds. You think he has a good business model, so you tell him you are willing to invest as long as the expected return on the investment is at least four times the return you would have received on the Treasury bonds. Determine which of these fundamental factors is affecting the cost of money in the scenario described:a.Inflation b.Risk c.Time preferences for consumption
Business
1 answer:
Rama09 [41]3 years ago
5 0

Answer:

The correct answer is letter "C": Time preferences for consumption.

Explanation:

American economists Irving Fisher (1867-1947) proposed the Time Preferences for Consumption theory that contrasts saving money to spending it today. According to the theory, people will weight the return of spending or saving money based on their expectations. It means, how much the goods an individual can purchase today are worth versus the return of the savings in the future.

Thus, in the case, <em>there is an evaluation of investing in Treasury Bonds versus investing today in a friend's business. The time preferences for consumption is applied when the individual compares the expected return of the Treasury bonds with what investing today could provide.</em>

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"The factor(s) which cause(s) a movement along the demand curve include(s):
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Answer: Option D

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In the movement, the demand of a commodity remains constant with all other factors such as advertising, income of consumers etc.

Hence from the above we can conclude that the correct option is D.

8 0
3 years ago
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Answer: The correct answers are,

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4 0
3 years ago
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Answer:

Slower economic growth

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3 0
3 years ago
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7 0
3 years ago
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Answer:

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Explanation:

Hope this helps :D

3 0
3 years ago
Read 2 more answers
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