Chapter 11-12 Economics Study Guide

Front

The Rule of 72 is used to figure out how long money must stay on deposit to triple.

Back

False

Front

Escheat laws stipulate that dormant accounts be given to the state after a certain period.

Back

True

Front

True or False. Banks post interest as often as they compound it.

Back

False

Front

The nominal interest rate of a deposit increases as the frequency of compounding increases.

Back

False

Front

To attract sizable deposits, financial institutions offer lower nominal interest rates.

Back

False

Front

The more frequently a bank compounds the interest on an account, the better it is for the depositor.

Back

True

Front

True or False. It is more important to take note of the nominal interest rate of an account than its effective interest rate.

Back

False

Front

True or False: Nominal interest rates are usually expressed in biannual terms.

Back

False

Front

Compound interest refers to doubling the rate of interest on an account.

Back

False

Front

True or False
The interest rate of a savings account is very important.

Back

True