Credit Market A. Plot the credit demand and supply curve in a figure. Specify the equi- librium real interest rate (r*) and the equilibrium quantity of credit (B*) in your figure. B. Everything else remaining unchanged, what is likely to happen to the credit market if the following scenario occurs? Separately and graphi- cally show the change of each scenario. Specify the new equilibrium in the credit market. B.1 Businesses in the economy see scope for growth and are planning to expand production in the future. B.2 Households expect a recession in near future. B.3 The government is planning to borrow money from financial in- stitutions for investment in infrastructures.

Please no written by hand solution 1 a) Assuming that Stanbic Bank has branches A, B, C D etc. and it receives a deposit of 50,000 Shs from a particular person. It then removes a cash ratio of 15%.       Explain how Stanbic Bank will create credit among her different branches. b) As a student of macroeconomics, what do you think, the government will do to achieve the forecasted drops in inflation rates. c) Discuss the major effects of taxes on the performance of our economy d) Advise the government on some of the major guiding principles they should follow when introducing a tax system e) Discuss the factors that limit the process of credit creation in any country   Kindly please do not use GOOGLE ( No Copy and Past)

Table  shows the amount of savings and borrowing in a market, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital financial market? Now, imagine the supply curve shifts so that there will be $50 million less supplied at every interest rate. Calculate the current and the new equilibrium interest rate and quantity, and explain the situation: the reasons of decrease of supply and what new equilibrium mean. Interest rate Qs Qd 5 200 470 6 270 320 7 320 320 8 350 300 9 400 200 10 500 100

Q) Assume consumers with standard preferences live for two periods. They receive an income in each period (? and ?′) and pay lump-sum taxes to the government (? and ?′). Credit markets are not perfect, and borrowers are charged a higher interest rate than lenders. The government never defaults, and faces the lenders’ interest rate whether it borrows or lends. Which are true? a) The number of lenders is equal to the number of borrowers b) A reduction in taxes in the current period without changes in the lifetime burden of taxes increases current consumption for a lender c) A borrower is better off if there is a reduction in the interest rate paid by borrowers d) A borrower is better off if there is a reduction in the interest rate paid by borrowers, but only if the substitution effect dominates the income effect e) A reduction in taxes in the current period without changes in the lifetime burden of taxes may transform a borrower into a lender

What happens to the commercial banks if the interest income rate is in a positive figure? Explain with an example Pls No copy paste and no plagiarism

Suppose you are in charge of the financial departmentof your company and you have to decide whether toborrow short or long term. Checking the news, yourealize that the government is about to engage in amajor infrastructure plan in the near future. Predictwhat will happen to interest rates. Will you advise borrowing short or long term?

A mortgage 105m is a loan that a person makes to purchase a house. Table 19.11 provides a list of the mortgage interest rate for several different years and the rate of inflation for each of those years. In which years would it have been better to be a person borrowing money from a bank to buy a home? In which years would it have been better to be a bank lending money?

If the government imposed a federal interest rate ceiling of 20 on all loans, who would gain and who would lose?