ECON 1

Question 1

refers to any medium of exchange that is widely accepted in the payments of goods or services and/or in settlement of debts.

Answer 1

money

Question 2

is the amount of money paid for the use of money called capital for a certain period of time or the income produced by money which has been loaned.

Answer 2

interest

Question 3

is the interest to be paid which is proportional to the length of time the principal is used.

Answer 3

Simple interest

Question 4

Types of simple interest

Answer 4

ordinary and exact

Question 5

computed based on banker’s year

Answer 5

Ordinary Simple Interest

Question 6

computed based on exact number of days

Answer 6

exact simple interest

Question 7

is a simple graphical representation of cash flows drawn on a time scale. It is used to simplify problems having diverse receipts and disbursements

Answer 7

cash flow diagram

Question 8

is a written promise of a person or business (as maker) to pay another person or business (payee) within a specified period of time.

Answer 8

promissory notes

Question 9

types of notes

Answer 9

simple interest note and bank discount note

Question 10

is a note where the value is stated on the note (face value) which corresponds to the principal amount, the total amount to be repaid (maturity value of the note), and the date to which the amount is due (maturity date)

Answer 10

simple interest note

Question 11

is a note where the value is stated on the note corresponds to the maturing amount to which the interest is being calculated and is deducted in advance. (The amount received by the maker is proceeds)

Answer 11

bank discount note

Question 12

is the difference between the present worth and the future worth.

Answer 12

discount

Question 13

is the interest earned by the principal which is added to the principal to earned an interest in the succeeding period.

Answer 13

COMPOUND INTEREST

Question 14

types of rate of interest

Answer 14

Normal rate of interest
Effective rate of interest

Question 15

specifies the rate of interest and a number of interest periods in one year

Answer 15

nominal rate of interest

Question 16

is the actual or exact rate of interest on the principal during one year

Answer 16

effective rate of interest

Question 17

is obtained by setting the sum of the values of a certain comparison / data to a single date point (known as the time reference).

Answer 17

equation value

Question 18

the interest is compounded at the end of each finite – length period such as month, quarter or a year. It is assumed that cash payment is done once a year but the compounding is continuous throughout the year.

Answer 18

discrete compounding

Question 19

is a series of equal payments made at equal interval of time

Answer 19

annuity

Question 20

types of annuity

Answer 20

ordinary
deferred
annuity due
perpetuity

Question 21

is one where the payments are made at the end of each payments

Answer 21

ordinary

Question 22

Is an annuity whose first payment is deferred to a certain number of periods.

Answer 22

deferred

Question 23

Is an annuity whose first payment is made at the start of each period.

Answer 23

annuity due

Question 24

is an annuity whose payment periods continues indefinitely

Answer 24

perpetuity

Question 25

the sum of the first cost and the present worth of all costs of replacement, operation and maintenance on a certain periods or forever). This is an important application of annuity

Answer 25

capitalized cost

Question 26

any method of repaying a debt, including the principal and interest and is usually by a series of equal payments at equal interval of time.

Answer 26

amortization

Question 27

is an instance where the disbursement or receipts involves is uniformly increasing or decreasing amount on each period

Answer 27

uniform arithmetic gradient

Question 28

refers to the decrease in the value of an asset due to usage of passage of time

Answer 28

Depreciation

Question 29

types of depreciation

Answer 29

1. Physical
2. Functional

Question 30

decrease in demand

Answer 30

functional

Question 31

mechanical and chemical changes

Answer 31

physical

Question 32

purpose of depreciation

Answer 32

1. recover the capital
2. charge the cost to cost of production