econ 201 ch 13

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  1. why does production require savings?
    because both direct and roundabout production take time- time during which goods and services are not available from current production
  2. positive rate of time preference
    • consumers value present consumption more than future consumption
    • consumer is willing to pay more now that wait
  3. interest rate
    interest per year as a percentage of the amount saved or borrowed
  4. marginal rate of return on investment
    the marginal revenue product of capital expressed as a percentage of its marginal cost
  5. intellectual property
    an intangible asset created by human knowledge and ideas
  6. present value
    the value today of income to be received in the future
  7. discounting
    converting future dollar amounts into present value
  8. annuity
    a given sum of money received each year for a specified number of years
Card Set
econ 201 ch 13
capital,interest, and corporate finance
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