What does it mean if a bank's advertisement for a certificate of deposit (CD) indicates a 4% APY?
- A. The CD matures at the rate of 4% each year.
- B. Only 4% of the CD's value can be withdrawn in any given year.
- C. You will pay 4% of the CD's value each year in service fees.
- D. The CD will earn 4% interest each year that is then added to the CD's balance.
Correct Answer & Rationale
Correct Answer: D
An advertisement indicating a 4% APY (Annual Percentage Yield) signifies that the CD will earn 4% interest annually, which is compounded and added to the CD's balance. Option A misinterprets APY; it does not refer to maturity but to interest earnings. Option B incorrectly suggests a withdrawal limit based on a percentage, which is not how CDs function. Option C mistakenly implies that there are service fees amounting to 4%, which is unrelated to APY. Understanding APY is crucial for evaluating the growth potential of a CD investment.
An advertisement indicating a 4% APY (Annual Percentage Yield) signifies that the CD will earn 4% interest annually, which is compounded and added to the CD's balance. Option A misinterprets APY; it does not refer to maturity but to interest earnings. Option B incorrectly suggests a withdrawal limit based on a percentage, which is not how CDs function. Option C mistakenly implies that there are service fees amounting to 4%, which is unrelated to APY. Understanding APY is crucial for evaluating the growth potential of a CD investment.
Other Related Questions
What is the effect of a debit on a person's checking account?
- A. The account's balance increases.
- B. The account's balance decreases.
- C. The account's interest rate increases.
- D. The account's interest rate decreases.
Correct Answer & Rationale
Correct Answer: B
A debit reduces the available funds in a checking account, leading to a decrease in the account's balance. Therefore, option B accurately reflects this effect. Option A is incorrect since a debit cannot increase the balance; it signifies money being spent or withdrawn. Options C and D relate to interest rates, which are unaffected by debit transactions in a checking account. Interest rates typically depend on the account type and bank policies, not on individual transactions like debits. Hence, they do not apply to the effect of a debit on the account balance.
A debit reduces the available funds in a checking account, leading to a decrease in the account's balance. Therefore, option B accurately reflects this effect. Option A is incorrect since a debit cannot increase the balance; it signifies money being spent or withdrawn. Options C and D relate to interest rates, which are unaffected by debit transactions in a checking account. Interest rates typically depend on the account type and bank policies, not on individual transactions like debits. Hence, they do not apply to the effect of a debit on the account balance.
Based on the obituary, what was one result business owners could expect if they put into place Taylor's doctrines?
- A. Loyal employees
- B. Increased outputs
- C. Managers doing more work
- D. Laborers becoming company presidents
Correct Answer & Rationale
Correct Answer: B
Implementing Taylor's doctrines, which emphasize scientific management and efficiency, would likely lead to increased outputs. These principles focus on optimizing work processes and enhancing productivity, resulting in higher production levels. Option A, loyal employees, is not a direct outcome of Taylorism; while efficiency may improve morale, loyalty is not guaranteed. Option C, managers doing more work, contradicts Taylor's aim of defining roles clearly to enhance efficiency. Option D, laborers becoming company presidents, is unrealistic within the framework of Taylor's doctrines, which prioritize specialization rather than promoting laborers to managerial positions.
Implementing Taylor's doctrines, which emphasize scientific management and efficiency, would likely lead to increased outputs. These principles focus on optimizing work processes and enhancing productivity, resulting in higher production levels. Option A, loyal employees, is not a direct outcome of Taylorism; while efficiency may improve morale, loyalty is not guaranteed. Option C, managers doing more work, contradicts Taylor's aim of defining roles clearly to enhance efficiency. Option D, laborers becoming company presidents, is unrealistic within the framework of Taylor's doctrines, which prioritize specialization rather than promoting laborers to managerial positions.
The purpose of antitrust legislation is to
- A. remove obstacles creating a trade imbalance.
- B. ensure fair competition in an open-market economy.
- C. prevent a nation's currency from losing too much value.
- D. improve consumer access to corporate financial information
Correct Answer & Rationale
Correct Answer: B
Antitrust legislation is designed to promote fair competition within an open-market economy, preventing monopolistic practices that can harm consumers and stifle innovation. Option A focuses on trade imbalances, which relate more to trade policies than to antitrust laws. Option C addresses currency valuation, a topic more relevant to monetary policy than competition laws. Option D concerns financial transparency, which, while important, is not the primary aim of antitrust regulations. Thus, ensuring fair competition is the central goal of antitrust legislation, safeguarding consumer interests and promoting a healthy market environment.
Antitrust legislation is designed to promote fair competition within an open-market economy, preventing monopolistic practices that can harm consumers and stifle innovation. Option A focuses on trade imbalances, which relate more to trade policies than to antitrust laws. Option C addresses currency valuation, a topic more relevant to monetary policy than competition laws. Option D concerns financial transparency, which, while important, is not the primary aim of antitrust regulations. Thus, ensuring fair competition is the central goal of antitrust legislation, safeguarding consumer interests and promoting a healthy market environment.
Which point on this PPF graph represents a currently unobtainable output level for this economy?
- A. V
- B. X
- C. Y
- D. Z
Correct Answer & Rationale
Correct Answer: D
Point D represents a currently unobtainable output level for this economy because it lies outside the production possibilities frontier (PPF). The PPF illustrates the maximum efficient production of two goods, given the available resources and technology. Point A (V), Point B (X), and Point C (Y) are all located on or within the PPF, indicating feasible production levels that the economy can achieve. In contrast, Point D (Z) exceeds these capabilities, signifying an output level that cannot be realized with the current resources and technology. Thus, only Point D is unattainable.
Point D represents a currently unobtainable output level for this economy because it lies outside the production possibilities frontier (PPF). The PPF illustrates the maximum efficient production of two goods, given the available resources and technology. Point A (V), Point B (X), and Point C (Y) are all located on or within the PPF, indicating feasible production levels that the economy can achieve. In contrast, Point D (Z) exceeds these capabilities, signifying an output level that cannot be realized with the current resources and technology. Thus, only Point D is unattainable.