complete this sentence: High interest rates might might purchasing a house, but at the same time high interest rates saving. Select one: a. encourage; discourage b. discourage; discourage c. discourage; encourage 17 d. encourage; encourage
Q: Question 3. Suppose that an economy can be described by the following equations: Y=C+I+ G, Y=5,000,…
A: *Answer :-
Q: According to the supply and demand model for saving, in a closed economy, an increase in the…
A: There exists equality between savings (S) and investment (I) In classical macroeconomic models. It…
Q: People should buy bonds when they think that interest rates are as high as they will go.
A: A bond is a financial instrument that allows an issuer to raise capital by borrowing money from…
Q: Why do you think the real interest rate was low during the recession in the mid-1970s and during the…
A: In the recession, the economic activities such as production and spending starts falling, the…
Q: 12. Which of the following is most likely to cause an increase in demand for loanable funds? (A)…
A: The demand for loanable funds reflects how borrowers in an economy act and the quantity of loans…
Q: government spending
A: 11. Private Saving: if the private saving of the people increases the consumer will able to…
Q: -Explain how a consumption tax could lead to a decrease in real interest rates.
A: Consumption is the share of income that consumer spends and not save. The income of a consumer is…
Q: How do the sophisticated financial systems of modern economies affect the relationship between…
A: Financial markets (such as those in which stocks or bonds are traded), securities (from bank CDs to…
Q: 1. Suppose the government borrows $20 million more next year than this year. a. Draw and fully label…
A: Answer: (d). The elasticity of the supply of loanable funds shows that if the interest rate changes…
Q: Suppose the government borrows $20 billion more next year than this year,a. Use a supply-and-demand…
A: A decrease in interest rates encourages people to borrow more while an increase in interest rate…
Q: Is saving or spending better,and who is it better for?Explain
A: Saving is the amount that remains after deducting consumption amount from the income. Below is the…
Q: Question 1 a. Use the loanable funds diagram to explain how you would expect an increase in…
A: Loanable funds market shows that how demand and supply of loanable funds affect interest rates and…
Q: 2. The Daisy-land's economy is described as follows: Y=C+I+G; Y=10,000; G=2,000; T-3,000;…
A: Private saving is the total amount of savings done by the private (financial and non-financial)…
Q: explains interest rate and its determinants. Please explain is 3 paragraph
A: The policy which includes changes in the interest rate and open market operations to stabilize the…
Q: Suppose there is a decrease in the demand for investment, and increase in saving in an economy. Show…
A: An investment curve is downward sloping due to the negative relationship between interest rate and…
Q: market both before and after the increase in foreign savings? c. How does the change in foreign…
A: Economic growth is an increase in the production of services and goods over a specific period of…
Q: Using a graph for the loanable funds market of this economy, show what are the effect on the…
A: The market for loanable funds describes how borrowing happens in the market. The supply of loanable…
Q: See attached image. Identify the value of savings in the economy What is the value of…
A: Circular flow of income describes the flow of income among the sectors. The sectors of the economy…
Q: e) Draw a graph showing the effect of increase in the interest rate on saving (draw just two points:…
A: Interest rate and savings are important variables in the economy. Interest rate denotes the return…
Q: Suppose the government has a budget surplus of $50 billion more next year than this year. a) Use a…
A: When the revenue from tax tends to be greater than the spending of the government, a budget surplus…
Q: You own a 6%bond and want to sell it in a yearl Di you hope that interest rates rise or fall?…
A: there are a lot of signals where we can say that we have to sell the bond.
Q: 1. A consumer, who is initially a lender, remains a lender even after a decline in interest rates.…
A: A decline in rates of interest would tend to make borrowing money cheaper that would encourage…
Q: Explain what happens to savings, investment and the real interest rate in an economy if the…
A: Government expenditure is basically the amount of money that is spent by the government on…
Q: Discuss the overall purpose people have for investing. Define investment
A: Investment: Investment is the commitment of funds for some specific period of time, in return will…
Q: c. Which of the following situations in c (i) & c (ii) represent investment? Saving? Explain (i)…
A: Saving is a situation when the Y(income) exceeds C(consumption) while investment is a situation when…
Q: The following equations describe an economy. (Think of C, I, G, etc as being measured in billions…
A: * ANSWER :-
Q: One of the biggest problems for any economy is to figure out how to get or transfer money from…
A: Financial markets are very important for the economy. Financial markets include capital market and…
Q: Economics - Chapter 11 Section Review WHAT STEPS WOULD YOU TAKE TO PURCHASE A BOND AND HOw WOULD YOU…
A: A bond is a fixed-income security that reflects a loan from an investor to a borrower (corporation…
Q: Suppose Indian government borrows 50,000/- more next year than this year. Use a supply-and-demand…
A: Meaning of Demand and Supply: The term demand refers to the willingness of an individual to…
Q: Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for…
A: Unemployment: - unemployment is that portion of the labor force that is able to do work and looking…
Q: The Economist article, "Low interest rates leave savers with few good options", states that savers…
A: Poeple save money for different reasons. Savings allow people to meet future expenses. Setting cash…
Q: Who benefits from an increase in interest rates? O people who are borrowing money O no one O people…
A: Interest rate: The interest rate is the rate or the proportion of an amount the lender or bank…
Q: What is the relationship between interest rates and business investment?
A: To determine the relationship between interest rates and investments.
Q: Explain why an increase in the interest rate reduces the amount of residential investment
A: Interest rates impact the level the residential investment.
Q: If Congress instituted an investment tax credit, the interest rate would Select one: a.rise and…
A: a. rise and saving would rise
Q: real interest rate
A: The real interest rate depicts that interest rate which is adjusted to inflation rate, it does not…
Q: Question 31 This person earns $1000 of income today and $2000 income next year. Point C represents…
A: Borrowing allows an individual to consume more they can afford using their current income. However,…
Q: Suppose the government borrows $20 million more next year than this year. a. Draw and fully label a…
A: Answer: If the government borrows $20 million more next year it means the government revenue falls…
Q: 1. Would you consider spending to make a school or an office building earthquake-proof a good…
A: 1 In order to create the earthquake resistant in the building and the schools is to build an…
Q: A. What is the real value of your savings if the price level increases by 10 percent for the year?…
A: It is given that Savings= $6000
Q: Q5.Amir Khan has a savings bank account in HDFC bank, some days back he had a meeting with one…
A: Amir Khan has a savings bank account in HDFC bank, some days back he had a meeting with one…
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- (a) You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? [1%] (b) In the next period however, the interest rate changes unexpectedly to i 0 . What is the new price of the bond? If the bond is sold at the beginning of that next period, what is the yield from the consol? Does the yield increase or decrease if i 0 > i? [4%] (c) Suppose alternatively that the market expects that the interest rate will change to i 0 after the initial period. What is the initial value of the consol, and what is the yield from selling it after one period? [5%]How do higher commissions on bonds affect interest rates? O Increase interest rates. Unrelated to interest rates. O Decrease interest rates.Raphael observes that at the current level of interest ratesthere is an excess supply of bonds, and therefore he anticipates an increase in the price of bonds. Is Raphael correct?
- Explain why money is worth more now than in the future, and howthe interest rate represents this relationship.What are the factors the can keep interest rates high? discuss it with the help of articles in detail.Jack’s Lock and Key are considering remodeling. It estimates that the remodeling will cost $6,000 and that as a result revenues will rise by $3,000 the first year, $2,500 the second year, $1,500 the third year, and have no effect after then. If the interest rate is 5%, should Jack’s remodel? Defend your answer by showing your work.
- Problem 17-03 (algo) Suppose that a risk-free investment will make three future payments of $500 in 1 year, $500 in 2 years, and $500 in 3 years. Instructions: Round your answers to 2 decimal places. a. If the Federal Reserve has set the risk-free interest rate at 16 percent, what is the proper current price of this investment? $ b. What is the price of this investment if the Federal Reserve raises the risk-free interest rate to 18 percent? $3. Discuss any three factors that determine Interest Rates?If inflation rises, why is a bond more likely to be sold at a discount to its face value?Explain, with reference to the bond’s coupon.
- Choose the correct answer and write only the corresponding letter 1.3 The distinction between a flow and a stock is that: ⦁ a. A flow measures monetary values, while a stock measures real values, such as factory output; ⦁ b. A flow measures an account on a monthly basis, while a stock measures it on an annual basis; ⦁ c. A flow measures value in nominal terms, while a stock measures it in real terms; ⦁ d. A flow measures a quantity over a period of time, while a stock measures a quantity at a specific moment. 1.4 Which of the following represent injections into the circular flow of income and spending? ⦁ a. Exports and investment; ⦁ b. Government spending and imports; ⦁ c. Government spending and saving; ⦁ d. Imports and savingWhat determine the Structure of Interest Rates and name the three primary shapes of the Structure of Interest Rates?Bond A pays $8,000 in 20 years. Bond B pays $8,000in 40 years. (To keep things simple, assume that theseare zero-coupon bonds, meaning the $8,000 is theonly payment the bondholder receives.)a. If the interest rate is 3.5 percent, what is the valueof each bond today? Which bond is worth more?Why? (Hint: You can use a calculator, but the ruleof 70 should make the calculation easy.)b. If the interest rate increases to 7 percent, what isthe value of each bond? Which bond has a largerpercentage change in value?c. Based on the example above, complete the twoblanks in this sentence: “The value of a bond[rises/falls] when the interest rate increases,and bonds with a longer time to maturity are[more/less] sensitive to changes in the interestrate.”