Pearson eText Economics -- Instant Access (Pearson+)
13th Edition
ISBN: 9780136879459
Author: Michael Parkin
Publisher: PEARSON+
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Chapter 24, Problem 22APA
To determine
Identify the impact of stock market crashes on the supply of loanable funds.
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The interest rate is 6 percent a year and you expect to receive $1,000 next year and the following year. What is present value of $1,000 to be received in two years? The present value of $1,000 to be received in two years is $____ Answer to 2 decimal places
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First Call, Inc., a smartphone company, plans to build an assembly plant-one
that costs $10 million if the real interest rate is 3 percent a year; a larger plant that
costs $12 million if the real interest rate is 2 percent a year;, or a smaller plant that
costs $8 million if the real interest rate is 4 percent a year.
Real interest rate (percent per year)
4.5-
4.0-
Draw a graph of First Call's demand for loanable funds curve.
3.5-
Draw a point to show the quantity of loanable funds demanded when the real
interest rate is
1) 4 percent a year. Label it 1.
3.0-
2) 3 percent a year. Label it 2.
3) 2 percent a year. Label it 3.
2.5-
Draw First Call's demand for loanable funds curve through the points. Label it.
2.0-
1.5-
10
11
12
13
Loanable funds (millions of dollars)
>>> Draw only the objects specified in the question.
Question 2
Full explain this question and text typing work only thanks
Chapter 24 Solutions
Pearson eText Economics -- Instant Access (Pearson+)
Ch. 24.1 - Prob. 1RQCh. 24.1 - Prob. 2RQCh. 24.1 - Prob. 3RQCh. 24.1 - Prob. 4RQCh. 24.2 - Prob. 1RQCh. 24.2 - Prob. 2RQCh. 24.2 - Prob. 3RQCh. 24.2 - Prob. 4RQCh. 24.2 - Prob. 5RQCh. 24.3 - Prob. 1RQ
Ch. 24.3 - Prob. 2RQCh. 24.3 - Prob. 3RQCh. 24.3 - Prob. 4RQCh. 24.3 - Prob. 5RQCh. 24.3 - Prob. 6RQCh. 24.4 - Prob. 1RQCh. 24.4 - Prob. 2RQCh. 24.4 - Prob. 3RQCh. 24 - Prob. 1SPACh. 24 - Prob. 2SPACh. 24 - Prob. 3SPACh. 24 - Prob. 4SPACh. 24 - Prob. 5SPACh. 24 - Prob. 6SPACh. 24 - Prob. 7SPACh. 24 - Prob. 8SPACh. 24 - Prob. 9SPACh. 24 - Prob. 10SPACh. 24 - Prob. 11SPACh. 24 - Prob. 12SPACh. 24 - Prob. 13APACh. 24 - Prob. 14APACh. 24 - Prob. 15APACh. 24 - Prob. 16APACh. 24 - Prob. 17APACh. 24 - Prob. 18APACh. 24 - Prob. 19APACh. 24 - Prob. 20APACh. 24 - Prob. 21APACh. 24 - Prob. 22APACh. 24 - Prob. 23APACh. 24 - Prob. 24APACh. 24 - Prob. 25APACh. 24 - Prob. 26APACh. 24 - Prob. 27APACh. 24 - Prob. 28APACh. 24 - Prob. 29APACh. 24 - Prob. 30APA
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- 1. Compute the following: a. The present value of $25,000 each year for 4 years at a 7 percent interest rate present value of $152,000 each year for 5 years at a 6 percent interest rate b. The C. The present value of $60,000 each year for 10 years at a 6.5 percent interest ratearrow_forwardHh.46.arrow_forwardIn five years, you want to be able to buy a new car for $30,000. If the interest rate is 3 percent a year, what is the present value of this sum? A. $30,000.00 B. $25,500.00 C. $25,878.26 D. $34,778.22arrow_forward
- If the interest rate is 8 percent, the present value of $200 paid one year from now equals $ If the $200 is received in two years (at the same interest rate), the present value will equal $ (round your answer to two decimal places).arrow_forwardKarrie is a golf pro, and after she paid taxes, her income from golf and her interest from financial assets totalled $2,500,000 in 2019. At the beginning of 2019, she owned $1,100,000 worth of financial assets. At the end of 2019, Karrie's financial assets were worth $1,300,000. How much did Karrie save during 2019?arrow_forwardSuppose that the interest rate is 4 percent. What is the future value of $100 four years from now? How much of the future value is total interest? By how much would total interest be greater at a 6 percent interest rate than at a 4 percent interest rate?arrow_forward
- Cindy takes a summer job and earns an after-tax income of $4,500. Her living expenses during the summer were $1,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. .... Cindy's saving during the summer is $ The change in Cindy's wealth is $.arrow_forward1. Assuming that the current interest rate is 3 percent, compute the present value (or price) of a five-year, 5 percent coupon bond with a face value of $1,000. What happens to the present value when the interest rate goes to 4 percent? Compute the new present value.arrow_forwardA3arrow_forward
- Cindy takes a summer job and earns an after-tax income of $8,000. Her living expenses during the summer were $2,000. What was Cindy's saving during the summer and the change, if any, in her wealth? >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. Cindy's saving during the summer is $9 The change in Cindy's wealth is $0. Nezarrow_forwardHarper is a short-lived human who only lives for two years: current year and next year. In the current year, Harper has an income of $189 and has to pay $36 in taxes. Harper expects that he can receive an income of $132 and has to pay $27 in taxes next year before he dies. The real interest rate between current and next year is 7%. What is Harper's lifetime wealth (in $)? Round your answer to at least 2 decimal placesarrow_forwardThe interest rate is 6 percent a year and you expect to receive $1,000 next year and the following year. What is the present value of $1,000 to be received next year? What is the present value of $1,000 tobe received in two years? The present value of $1,000 to be received next year is $ ____. >>>>Answer to 2 decimal places.arrow_forward
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