discussion 2 econ and finance

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answer.  People gain confidence that the economy is growing and that their jobs are secure.

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.  Because of a threat of war, people become uncertain about their economic future. The overall level of saving in the economy diminishes.  The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.

NOTE: Please explain what’s in the photo attached.

The market interest rate is 9 percent and is expected to stay at that level. Consumers can borrow and lend all they want at this rate. Would you prefer a $350 rebate on a $7,000 car or one year of financing for the full price of the car at 0 percent interest? You would What if the interest rate were 13 percent? If the interest rate were 13 percent, then you would prefer the financing be indifferent prefer the rebate

The decrease in savings causes the decrease in supply of loanable funds.   Select one: True False

Identify a financial market and describe it using an economic approach. What are the goods exchanged? How is the supply set? How is the demand set? What are the constraints that are potentially preventing the market reaching an equilibrium? Reflect on how your new understanding of fundamental economic functions can apply or will apply to your professional experience. Identify a key area where you could apply this new knowledge and explain how it will help you to provide a better analysis of the economics forces at work.

Discuss the effect that the COVID-19 pandemic has had on credit creation, citing relevant examples.

Credit rationing and the financial accelerator are responsible, in part for a) the significant volatility of gross private investment B) the significant volatility of real personal consumption C) smoothing gross private investment during severe recessions. D) smoothing real personal consumption during expansions. During recessions, the value of collateral decreases and corporate profits decrease, so firms do not have cash to finance new investment projects. Therefore, credit rationing depends on state of the economy. This situation is known as the A) risk acceptance cost. B B) lender's dilemma c) default premium D) financial accelerator Pls solve asap

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.  The number of people at the most common ages for home-buying increases.

Kirk was a bright individual who was being groomed for the Controller’s position in a medium-sized manufacturing firm. After his first year as Assistant Controller, the officers of the firm were starting to include him in major company functions. For instance, today he was attending the monthly financial statement summary given at a prestigious consulting firm. During the meeting, Kirk was intrigued at how all the financial data he had been accumulating was transformed by the consultant into revealing charts and graphs. Kirk was generally optimistic about the session and the company’s future until the consultant started talking about the new manufacturing plant the company was adding to the current location and the costs per unit of the chemically plated products it produced. At that time, Bob (the President) and John (the chemical engineer) started talking about waste treatment and disposal problems. John mentioned that the current waste facilities were not adequate to handle the…

Exercise #1: Write two paragraphs on the impact of borrower liquidity (think, cash like assets and income) vs. equity (think, property value). These issues can be measured at loan origination, and also can and do change over the life of the loan. They are effected by macro-economic factors, like the local or general health of the economy and by personal factors like death, divorce, lost of employment, and over spending/poor financial management.

Major energy companies have recently started moving their investments away from oil exploration due to the emergence of renewable energy as a credible alternative. Yet the government of Ghana has decided to borrow money to invest in oil exploration. Do you agree with the government’s decision? Explain your stance.

Collaboration with Congress during the Clinton Administration allowed for an aggressive deficit-cutting plan to pass. As a result, the government was able to reach a balanced budget at the end of the 90's. Move the supply and/or demand curves to describe the expected effect that this deficit-reduction likely had upon the loanable funds market. As a result, private investment should have a) decreased as the cost of borrowing increased. b) increased as the cost of borrowing increased. c) increased because the cost of borrowing decreased. d) decreased as the cost of borrowing decreased.

Saved You and your spouse are in good health and have reasonably secure jobs. Each of you makes about $45,000 annually. You own a home with a $150,000 mortgage, and you owe $11,600 on car loans, $7.200 in personal debt, and $3.250 in credit card loans. You have no other debt. You have no plans to increase the size of your family in the near future. You estimate that funeral expenses will be $8.000. Estimate your total insurance needs using the DINK method. Total insurance need ces

Bryan has applied for a mortgage with Bank of Amen. The bank is reviewing the amount of Bryan's monthly income that is used to pay his monthly debt to determine the level of risk in offering him a mortgage. Which of the following concepts characterizes the basic components of a credit score being utilized by the bank? A payment history B debt-to-income ratio с available credit D length of credit history

​​​​​​Construct a well-labeled diagram of supply and demand in the market for loans that depicts an equilibrium with credit rationing. Be sure to clearly identify the market interest rate, the quantity of loans supplied and the quantity of loans demanded.

The financial system in Jamaica has been the subject of much attention since the news broke of the alleged fraud at Stocks and Securities Limited (SSL). The governor of the Bank of Jamaica (BOJ) has been fielding calls from concerned investors, international financial institutions, and even other regional regulators concerning the impact of this situation and the negative media reporting would have on the stability of the financial system in Jamaica and the Caribbean region.The governor would like to preserve confidence in the financial markets and institutions and has decided to embark on a series of educational “road-shows” where he will address targeted stakeholders such as the American Chamber of Commerce (AMCHAM), investor groups and the media.In this regard, the governor has assigned your team of senior professionals employed at the Bank of Jamaica to prepare a presentation slide deck for his address.  Give an overview of the structure of the Jamaica financial systemThe role of…

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The market interest rate is 9 percent and is expected to stay at that level. Consumers can borrow and lend all they want at this rate. Consider each of the following situations. 1) Would you prefer a $500 gift today or a $540 gift next year? 2) Would you prefer a $100 gift now or a $500 loan without interest for four years? 3) Would you prefer a $350 rebate on an $8000 car or one year of financing for the full price of the car at 0 percent interest?

Suppose you buy a house for $250,000. One year later, the market price for the house has fallen to $200,000. What is the return on your investment in the house if you made a down payment of 10 percent and took out a mortgage loan for the other 90 percent?

Suppose the government borrows $20 million more next year than this year. How does the elasticity of the supply of loanable funds affect the size of these changes?     How does the elasticity of the demand of loanable funds affect the size of these changes?

Jonathon and his family were negotiating a lease for commercial premises to be used for their Italian restaurant. Part of the negotiation concerned the ability of Jonathon to demolish a wall in order to remodel the interior and build a pizza oven. The landlord shook Jonathon’s hand and told him they had a deal and that he could go ahead and get started. Jonathon took out a large bank loan to finance the remodelling. Four weeks later, Jonathon received a letter from the landlord indicating that he did not intend to proceed with the lease. Jonathon has already spent $100,000 on the remodelling but he has not received a signed a lease as yet. Since there is no breach of contract, does Jonathon have any other recourse in equity?

Johnny Bigbucks is 58 years old and lives in rural Mississippi. He has been very successful in several business ventures, but with the downturn in the economy, he finds his business interests quickly on the demise. The businesses are all separate legal entities, but as many small business owners, Johnny guaranteed many of the business debts. With the businesses all but shut down and without funds to meet their obligations, creditors of the businesses are now turning to Johnny on the guarantees they have. Several creditors, SmallBiz Bank, and Littleguy Bank, have sued Johnny and obtained default judgments for the obligations, and are about to attempt to collect those debts from Johnny. Fortunately for Johnny, he has accumulated substantial wealth ($1.5 million) in creditor-protected retirement accounts. All of his other valuable assets, including his $600,000 home, custom pontoon boat, luxury car, and other items are titled his wife, Betsy. Johnny is judgment proof in terms of any…

! Required information A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a "mortgage" over a certain number of years for the right to buy good seats at football games for several decades with season ticket prices locked in. The locked-in price period is 50 years in California. Assume you and your brother went to UCLA. Your brother, Harold, purchases a $40,000 mortgage and pays for it now to get season tickets for $290 each for 50 years, while you, being a three-time alumnus of the same university, are able to buy season tickets at $390 in year 1, with prices increasing by $20 per year for 50 years. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Which of you made the better deal at an interest rate of 8% per year? The present worth of Harold's investment is $-…

! Required information A sports mortgage is the brainchild of Stadium Capital Financing Group, a company headquartered in Chicago, Illinois. It is an innovative way to finance cash-strapped sports programs by allowing fans to sign up to pay a "mortgage" over a certain number of years for the right to buy good seats at football games for several decades with season ticket prices locked in. The locked-in price period is 50 years in California. Assume you and your brother went to UCLA. Your brother, Harold, purchases a $20,000 mortgage and pays for it now to get season tickets for $290 each for 50 years, while you, being a three-time alumnus of the same university, are able to buy season tickets at $390 in year 1, with prices increasing by $20 per year for 50 years. NOTE: This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Which of you made the better deal at an interest rate of 8% per year? and the present The present worth of Harold's…

If an economic expansion in the economy caused an increase in the demand for loanable funds, what would be the effect on the interest rate and the quantity of funds loaned in the credit market?   Question 20 options:   Interest rates would decrease and the quantity of funds loaned would increase   Interest rates and the quantity of funds loaned would decrease   Interest rates and the quantity of funds loaned would increase   Interest rates would increase and the quantity of funds loaned would decrease

Lending institutions charge different interest rates for different classifications of mortgages. Two of these mortgage types are Alt-A mortgages and subprime mortgages. Alt-A mortgages generally carry a higher interest rate than a typical “prime rate” mortgage, and subprime mortgage rates are generally even higher than Alt-A rates. What is the likely economic justification for the higher interest rates for these two types of mortgages?

Question 3 For parts a)-d), evaluate the effect of each of the following events on the market for loanable funds. Explain the effects on savings, investment, and the (neutral) real interest rate. a) The government runs a government budget surplus instead of a deficit. b) The government decides to forgive some of the $66 billion in student loan debt. c) Chinese investors stop sending their funds to Australia, reducing net capital inflows. d) The nominal interest rate rises 1% in response to a 1% rise in the inflation rate. Briefly compare the impact of the global financial crisis (GFC) in the US in 2007- 2009 to other U.S. recessions since 1950. Why did household consumption in the US fall during this recession, unlike in previous recessions? ŵ

Should governments pay off their debts and not be allowed to borrow any more except under special extreme circumstances (like the current pandemic or if they were at war)? Explain the reasons for your answer clearly.

In Pakistan there is currently a pensions crisis because the government did not plan pensions of public sector employees efficiently. Instead of raising funds from lifetime earnings of employees, and giving pensions as returns on savings, pensions currently require budgetary allocation in Pakistan, leading to financial burden on government.  In developed countries like the US, where people plan their own pensions this planning for retirement requires a lot of effort, forward thinking and knowledge of financial opportunities. Even then pensions are never completely secure in the US. So, this system is not entirely suitable in Pakistan. Examine the Pension Crisis from perspective of Permanent Income Hypothesis and its modern versions to explain the possible causes of this crisis. Related to causes in part I suggest solutions to the pension crisis in Pakistan