2. Use diagrams to show Ricardian Equivalence and the Impact of a Budget Surplus on Credit Markets. (Two altogether separate diagrams.) Label and draw changes carefully. Explain in a sentence or two the thrust of each concept (i.e., what happens or changes).
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- 16. Assume that the government sets a ceiling on the interest rate that banks charge on loans. If the ceiling is set below the market equilibrium interest rate, the result will be: Select one: a. a shortage of credit. b. greater profits for banks issuing credit. c. a surplus of credit d. a perfectly inelastic supply of credit in the market place.Q)Economics What is Mortgage Crisis? What are the causes of mortgage crisis? What is the impact of mortgage crisis on economy how to reduce mortgage crisis? Note:-Not Copy pastea). Under what condition do we say a financial market is efficient? Distinguish between weak and semi-strong form efficiency. b). Explain any five (5) ways a company can raise equity capital in the financial market. c). One of the ways in which the government can finance its fiscal deficit is to borrow funds through the domestic loanable fund market. Explain how this deficit financing strategy of the government can crowd out the domestic private sector and increase interest rate.
- Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Which curve will shift: supply or demand? In which direction will the curve shift: right or left? (It may help to use a demand and supply diagram to conduct your analysis.) a. The number of people at the most common ages for home-buying decreases. b. Rents rise extremely rapidly. c. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans. d. Because of a threat of a war, people become uncertain about their economic future.The overall level of saving in the economy diminishes. e. The federal government changes its bank regulations in a way that makes it cheaper and easier for banks to make home loans.1.Discuss the benefits of pursuing revenue maximisation?What is a "liquidity premium"? Select one: a. Extra risk due to the lack of liquidity associated with short term investments. b. Extra risk due to the lack of liquidity associated with long term investments. c. Extra return due to the lack of liquidity associated with long term investments. d. Extra return due to the lack of liquidity associated with short term investments.
- 1a) The surplus and deficit economic agents engage in financial markets transactions to satisfy their needs in the most efficient manner. Explain the needs and motivation of those surplus and deficit economic agents. Discuss why they use the financial markets and how they have conflicting preferences in terms of liquidity, risk and amounts of money.Question 4 A credit instrument can be defined as a financial instrument that returns payments that are but do not but do not Question 5 A "junk bond" typically has a very high interest rate relative to other corporate bonds. A 30-year Treasury bond typically has a fairly high interest rate relative to other bonds issued by the U.S. Treasury department. on the interest rate The first example illustrates the impact of the basic attribute of, on a credit instrument. The second example illustrates the impact of the basic attribute of on the interest rate on a credit instrument.4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have a higher likelihood of default. They are made to people with relatively poor credit history. They are made to people with relatively few assets. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of these mortgages? Check all that apply. Decreased regulation of the financial sector A shift to lower-risk investments by investors The Federal Reserve setting low interest rates in the early part of the 2000s The expectation that housing prices would keep rising
- SECTION A: ANSWER ALL QUESTIONS 1. Financial intermediation is? A. Savers being matched with borrowers. B. A person with surplus giving money to a bank, who in turn lend it to a borrower. C. A process that is more effective than direct finance. D. All of the above. 2. Which mechanisms do firms use to invest? A. Supplying securities to households. B. By creating money. C. Through increasing money supply in the economy. D. Raising prices of goods and services. 3. All of the following are costs associated with direct finance except? A. Searching costs B. Depreciation costs C. Verification costs D. Enforcement costs 4. What is the difference between a stock and a flow? A. Only government can possess a stock. B. A stock is measured over a period of time. C. Flows are measured at a point in time. D. None of the aboveF2 2. Use diagrams to show Ricardian Equivalence and the Impact of a Budget Surplus on Credit Markets. (Two altogether separate diagrams.) Label and draw changes carefully. Explain in a sentence or two the thrust of each concept (i.e., what happens or changes).Question 13 Select the correct statement: Your interest rate on your loan with the credit card company can go up big O A. time if you make late payments, or go over your credit limit. Your interest rates on your loan with many credit card companies can go up O B. big time if you make late payments on other bills that have nothing to do with your credit card. Your interest rate on your loan with many credit card companies can go up C. big time for no reason at all. O D. All of the above. Question 14 Save and Quit s a really tough question. Select the correct statement: DELL 24 &