For each of the following pairs, which bond would you expect to pay a higher interest rate? Explain! a).  a bond of the U.S. government or a bond of an East European government b).  a bond that repays the principal in year 2015 or a bond that repays the principal in year 2040 c).  a bond from Coca-Cola or a bond from a software company you run in your garage

Q: The figure depicts a demand-for-loanable-funds curve and two supply-of-loanable-funds curves. Which…

A: Loanable Funds is defined as the sum total of the money owned by the people and entities in an…

Q: The economy of Dream Island, which is isolated from the rest of the world, has the supply of…

A: Demand curve for the loanable fund shows the level of demand for loan at different interest rate.…

Q: In detail what are some of the factors that affect demand for loanable funds according to the…

A: Demand is the total quantity of goods and services in the market for which the consumer is willing…

Q: A tax law change that successfully encourages saving will interest rates, which leads to investment…

A: Equilibrium in the loanable funds market occurs at the intersection of demand and supply curves of…

Q: Suppose that the government changes the tax code to allow additional amounts of money to be placed…

A: Change in tax code leads to increase in supply of loanable fund in the market, thus the supply curve…

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: Using the loanable fund model (financial market) presented in chapter 3, suggest using a graph at…

A: The funds that are available for lending out to the borrowers in an economy are referred to as…

Q: would bonds still be a good option for investment if interest rates are negative?

A: Negative-yielding bonds are monetary instruments that cause buyers to lose cash.  They are typically…

Q: Suppose we have a financial market where Qd = −1r + 26 Qs = 1.5r + 1 a. What is the equilibrium…

A: The equilibrium interest rate can be calculated by equating demand and supply functions as follows:…

Q: How do people typically respond to higher real interest rates? by saving less by paying more taxes…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: At 1% interest rate, how much should you invest today to be able to withdraw ₱ 3,053 annually for 8…

A: 1% interest rate is given monthly , where he withdraw 3053 annually for 8years . And payment is done…

Q: Using the concepts of real interest rate and expected rate of return, test the relationship between…

A: The link between saving and investment is a major source of disagreement in macroeconomics. Before…

Q: Along with the onset of the pandemic, capital inflows to Monotreme declined. Analyze the impact of…

A: Capital inflow: It refers to the increase in the inflow of capital in the economy. The increase in…

Q: First Call, Inc., a smartphone company, plans to build a factory-one that costs $14 million if the…

A: Market for loanable funds determines equilibrium interest rate where demand for loanable funds is…

Q: Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds…

A: Answer - Need to find - A shift of supply curve from S1 to S2 is called  Given in the question - Two…

Q: If there is a weakening in time preferences among U.S. consumers and foreign entities that channel…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: Which of the following could explain an increase in the equilibrium interest rate and a decrease in…

A: Market for loanable funds shows demand and supply for loanable funds and equilibrium in the market…

Q: Provide two examples of changes in the market for loanable funds that can result in a change in the…

A: Since the questions asked multiple questions. According to our policy, we can only answer 1 question…

Q: Draw the diagram for the loanable funds model. Suppose the tax laws are altered to provide more…

A: Loanable funds include all types of credits that are available in the market to firms and households…

Q: For each of the following pairs, which bond wouldyou expect to pay a higher interest rate?…

A: a) Risk and return are directly related. The higher the risk, the more would be the return. In this…

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: You would expect a bond of the U.S. government and a bond of an Eastern European government to pay…

A: A bond is a fixed-income security that reflects a loan from an investor to a borrower (usually a…

Q: Over time how do changes in the demand for loanable funds and the supply of loanable funds change…

A: A loanable funds market is the place where firms make demand for loanable funds and household make…

Q: Where does the demand for loanable funds come from in a closed economy? How does a government…

A: Closed economy: A closed economy is one that does not engage in international commerce, which means…

Q: How will equilibrium real interest rate and equilibrium quantity of loans change?

A: Equilibrium in the market for loanable funds occurs where the quantity demanded and supplied of…

Q: All other things equal, an increase in government borrowing will ________   a. shift the demand…

A: Government borrowing is financed thorough loanable funds. Increase in government borrowing means…

Q: What group of people benefits from a higher interest rate? Explain how they benefit

A: Interest is the opportunity cost of holding money.

Q: c. Which of the following situations in c (i) & c (ii) represent investment? Saving? Explain (i)…

A: Saving: This defines that when a person's income exceeds his consumption is called savings which…

Q: Select the true statement or statements regarding the loanable funds market. a.The purchase of…

A: Loanable funds market can be defined as the market where supply and demand of loanable funds takes…

Q: According to the table, in which year did buyers of six-month Treasury bills receive the highest…

A: According to the Fisher equation: Real interest rate = Nominal interest rate - inflation rate The…

Q: You borrow $100 from one friend. You sell another friend an old cell phone case for $30. You give a…

A: As given $100 borrow from one friend and $30 recieve after selling an old cell phone case and $80…

Q: Refer to the figure above. Assume that the loanable funds market initially is in equilibrium at…

A: New equilibrium is at point A where new demand curve(D2) and new supply curve(SA) intersect.

Q: Explain Three ways that a reduced rate of interest influences real capital investment.

A: Answer - Need to find- Explain Three ways that a reduced rate of interest influences real capital…

Q: Imagine a scenario in which there is a decreased consumer confidence in domestic financial systems.…

A: Keeping money in foreign financial institution will reduce the money available in domestic country.

Q: Calculate what you would actually be willing to pay for this bond.

A: The current value of a future sum of money at a given rate of return is called the present value.…

Q: Draw a graph to illustrate the effect of an increase in the demand for loanable funds and an even…

A: The effect of increasing demand for and a large increase in supply of loanable fund on equilibrium…

Q: a high interest rate can also indicate that something positive is happening in the economy. Describe…

A: A high interest rate can also indicate that something positive is happening in the economy.

Q: Using the accompanying diagram, explain what will happen to the market for loanable funds when there…

A: Loanable Funds Market is the one where where the activity of borrowing takes place. Here, savers…