(a) The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel Introduction: Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

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Answer 1

Question

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

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Answer 2

Question

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

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Answer 3

Question

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

Expert Solution & Answer

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Answer 4

Question

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

Expert Solution & Answer

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Answer 5

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

Answer 6

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

Answer 7

Chapter 25, Problem 21Q

To determine

(a)

The effect of the global financial crisis, where there was a fall in the mortgage rates in 2011, on the economy according to the household liquidity effect channel

Introduction:

Household liquidity effect channel shows the effect of credit view of monetary policy on spending on consumer durables and house loans. A monetary contraction leads to a decrease in money supply, increases in rate of interest and further leads to a decline in bank lending and causes decline in consumer spending.

Answer 8

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

Answer 9

To determine

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 25 - Prob. 1Q Ch. 25 - Prob. 2Q Ch. 25 - Prob. 3Q Ch. 25 - Prob. 4Q Ch. 25 - Prob. 5Q Ch. 25 - Prob. 6Q Ch. 25 - Prob. 7Q Ch. 25 - Prob. 8Q Ch. 25 - Prob. 9Q Ch. 25 - Prob. 10Q

(b) The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.

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Chapter 25 Solutions

(b)

The effect of the global financial crisis if banks raised their credit standard and made it difficult to qualify for home loans and to refinance existing loans on the consumer durables and housing according to the household effect channel.