When consumers and businesses have greater confidence that they will be able to repay loans inthe future:The quantity supplied of financial capital at any given interest rate will shift to the rightThe quantity demanded of financial capital at any given interest rate will shift to the rightThe quantity demanded of financial capital at any given interest rate will shift to the leftThe quantity supplied of financial capital at any given interest rate will shift to the left

Loan repayment is defined as the act paying back the loan. This loan repayment occurs through a…

Answered: When consumers and businesses have…

Business

Economics

When consumers and businesses have greater confidence that they will be able to repay loans

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter4: Labor And Financial Markets

Section: Chapter Questions

Problem 31P: Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes,...

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10. Which of the following would cause the Aggregate Quantity Demanded to increase? a) An increase in the price level causing an increase in the purchasing power of the consumer's wealth b) A decrease in the price level making domestic prices less expensive relative to foreign prices c) An increase in the price level causing an increase in the market rate of interest d) A decrease in the price level causing a decrease in the purchasing power of the consumers' wealth e) None of the above
Refer to the table below. Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 Instructions: Enter your anwers as whole numbers. A). What is the equilibrium level of output? What is the equilibrium price level? B). Suppose that aggregate demand increases such that the amount of real output demanded rises by $ 7 billion at each price level. Insert the new values for real output demanded in the table below. Real Output Demanded, Billions New Real Output Demanded, Billions Price Level Real Output Supplied, Billions $ 506 108 $ 513 508 104 512 510 100 510 512 96 507 514 92 502 What is the new equilibrium level of output? What is the new equilibrium price level? By what percentage will the price level increase? Will this inflation be demand-pull inflation or will it be cost-push inflation? C) If potential real GDP ( that is, full-employment GDP) is $ 510…
True/False 11) The term ‘voodoo economics’ is a term used by the proponents of supply side economics trying to explain to its critics that lower tax rates will result in higher tax revenue.12) Barro is considered to be a supply side economist which is consistent with his idea that we should eliminate the corporate income tax.13) According to the table depicting the effective tax rate on capital for 2007, the only country that has a higher effective tax rate on capital is Greece.14) According to our discussion of supply side economics, there are positive aggregate demand side effects and positive supply side effects, similar to what happened during the new economy.15) We argued that the tax multiplier is higher in absolute value than the government spending multiplier.16) The more the Fed accommodates shocks to money demand, the larger the (government) spending multiplier.17) According to the Congressional Budget Office (CBO), the stimulus package worked in termsof creating jobs,…
The Conversation article "Will taxing short stays boost long-term rental supply? Other policies would achieve more ) mentions a natural experiment provided by Covid-19 that provides insights into the potential impact of short- term rental platforms. The focus is on state and national border closures associated with Covid-19. What is the article implying in terms of the impacts of these border closures on the short-term and long-term rental markets? For the short-term rental market, the best represents the impact of state and national border closures (associated with Covid-19). For the long-term rental market, the represents the impact of state and national border closures (associated with Covid-19).
E4 What is a viable cause for the right shift of this Supply Curve below? Group of answer choices Government Budget Deficit All of the Above Government Budget Surplus Investment Tax Incentives
Table 4.6 shows the amount of savings and barrowing in a market for loans lo purchase homes, measured in millions of dollars, at various interest rates. What is the equilibrium interest rate and quantity in the capital financial market? How can you tell? Now, imagine that because of a shift in the perceptions of foreign investors, the supply curve shifts so that there will be 10 million less supplied at every interest rate. Calculate the new equilibrium interest rate and quantity, and explain why the direction of the interest tale shift makes intuitive sense.
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. People gain confidence that the economy is growing and that their jobs are secure. Banks that have made home loans find that a larger number of people than they expected are not repaying these loans. Because of a threat of a 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.
Please no written by hand solution Assume that the potential GDP of the economy of Arion is $1,160, and that the aggregate demand and aggregate supply are as shown in the following table. Aggregate Quantity Demanded 1 Aggregate Quantity Demanded 2 Price Index Aggregate Quantity Supplied $1,240 96 $1,000 1,220 97 1,040 1,200 98 1,080 1,180 99 1,120 1,160 100 1,160 1,140 101 1,200 1,120 102 1,240 1,100 103 1,270 1,080 104 1,300 1,060 105 1,330 a. The value of equilibrium real GDP is and the price level is . There is (Click to select) gap. The gap is equal to $ . b. If firms become more optimistic and aggregate demand increases by $60, complete the aggregate demand 2 column in the table above. c. The new value of equilibrium real GDP is and the price level is now . d. There is (Click to select) gap. The gap is equal to $ .
Consider an economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows: GDP Taxes DI C I G (X - IM) $1,360 $400 $960 $720 $200 $500 $30 1,480 400 1,080 810 200 500 30 1,600 400 1,200 900 200 500 30 1,720 400 1,320 990 200 500 30 1,840 400 1,440 1,080 200 500 30 Find the equilibrium of this economy graphically. What is the marginal propensity to consume? What is the multiplier? What would happen to equilibrium GDP if government purchases were reduced by $60 and the price level remained unchanged?
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In the short run, the quantity of output supplied by firms can deviate from the natural level of output if the actual price level deviates from the expected price level in the economy. A number of theories explain reasons why this might happen. For example, the misperceptions theory asserts that changes in the price level can temporarily mislead firms about what is happening to their output prices. Consider a soybean farmer who expects a price level of 100 in the coming year. If the actual price level turns out to be 90, soybean prices will (decrease/not change/increase) , and if the farmer mistakenly assumes that the price of soybeans declined relative to other prices of goods and services, she will respond by (raising/lowering) the quantity of soybeans supplied. If other producers in this economy mistake changes in the price level for changes in their relative prices, the unexpected decrease in the price level causes the quantity of output supplied to (fall short of/exceed) the…
Consider the following economy. Individuals are endowed with y units of the consumption good when young and nothing when old, but would like to consume in both periods. People face a lump-sum tax of t goods when young and a rate of expansion of the fiat money supply of z > 1. The tax and the expansion of the fiat money stock are used to finance government purchases of g goods for each old person in every period. There are N people in every generation (constant population). (a) Find the individual's budget constraints when young and when old. Combine them to derive the individualís lifetime budget constraint. Explain the results.