a) When the demand of output decides how much to produce which type of demand prevails in the economy? B) Why investment is negatively related to interest rate? c) Give the equilibrium in the market for loans?
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Q4
a) When the demand of output decides how much to produce which type of demand prevails in the economy?
B) Why investment is negatively related to interest rate?
c) Give the equilibrium in the market for loans?
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- If, at a given interest rate, the quantity of savings supplied is less than the quantity of investment demanded, what can we conclude? A) B) C) D) There is a shortage of savings and real interest rates will fall. There is a surplus of savings and real interest rates will fall. There is a surplus of savings and real interest rates will rise. There is a shortage of savings and real interest rates will rise. Show Transcribed Text Which of the following does NOT occur in an economy experiencing full employment? underemployment A) B) structural unemployment C) cyclical unemployment D) frictional unemployment S Show Transcribed Text If professors lose their positions at universities because of the widespread introduction of courses over the Internet, what would faculty members that remained unemployed be considered? underemployed structurally A) B) unemployed frictionally C) unemployed cyclically D) unemployed. SPredict 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.Exercise 4. You are a manager at a certain factory that designs small gadgets. The factory has been quite successful in the past years. Your CEO is wondering whether or not it is a good idea to expand the factory this year. The cost to expand the factory is $1.5M. Doing nothing will result in expected $3M in revenue if the economy stays good and people continue to buy plenty of gadgets, but only $1M in revenue is expected if the economy is bad. On the other hand, expanding the factory carries an expected $6M in revenue if economy is good and $2M if the economy is bad. Assume there is a 40% chance of a good economy and a 60% chance of a bad economy. Also, assume the costs of operating the factory account to $.5M if the factory is expanded and $.3M if not. a. Illustrate a Decision Tree showing these choices. b. What should you do?
- 3. Supply and demand for loanable funds The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds. Supply Demand 100 200 300 400 500 LOANABLE FUNDS (Billions of dollars) A INTEREST RATE (Percent) m 0 0 60013) With the money stock growing and assuming that the endowment of the young is time, the following consequence(s) proceed: A) The youngs' desire to work increases. B) The youngs' leisure consumption increases C) The youngs' demand for money increases D) All of the above.Question 35 Suppose real estate analysts expect that 100,000 homes will be needed in a particular community by 2014. If the current number of homes in the community is only 50,000, we can expect to see a significant increase in the demand for investment. True O False
- 3. Discuss how to evaluate an investment project and how to use real options to determine whether to make the following decisions: (a) investment decisions, (b) exit decisions.(Saving,investment) is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded (decreases, increase). Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanable funds supplied is (greater,less) than the quantity of loans demanded, resulting in a (surplus,shortage) of loanable funds. This would encourage lenders to (raise,lower) the interest rates they charge, thereby (increasing, decreasing) the quantity of loanable funds supplied and (increasing, decreasing) the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of ______%.How many points (out of the 6 shown) can be explicitly plotted to form the IS curve given the goods market equilibrium?A goods market equilibrium is shown below: A, B, C, D, E, F 32- A goods market equilibrium is shown below: S₁ (Y= 400) 28- Real Interest Rate, r (%) S2(Y=600) S3 (Y = 800) 226 24- A 20- B C 16- 12- E 4- 0- 0 l(r) F 50 100 150 200 250 300 Desired national saving / desired investment We recommend that you drow out the IS curve before answering
- The market interest rate is 9 percent and is expected to stay at that level. Consumers can borrow and lend all they want at this rate. Would you prefer a $350 rebate on a $7,000 car or one year of financing for the full price of the car at 0 percent interest? You would What if the interest rate were 13 percent? If the interest rate were 13 percent, then you would prefer the financing be indifferent prefer the rebateAssume that GBP|USD = 2.00 (rate chosen for math ease). After the passage of a significant tax increase in the United States, the United States stock market is expected to drop significantly over the next month while the British stock market is expected to show steady growth. As a result which of following is most likely in a graph of the currency market with GBP per USD (original equilibrium is USD|GPB = 0.50) on the vertical axis (quantity of USD on horizontal axis)? Drawing a diagram would be useful. A. The supply curve would shift left and the new price would be greater than 0.50. B. The supply curve would shift right and the new price would be greater than 0.50. C. The supply curve would shift left and the new price would be less than 0.50. D. The supply curve would shift right and the new price would be less than 0.50.Make sure to show your work to get credit. 1. Assume: Yd = $194,000 %D b = .90 a = $ 8,000 A)What is consumption (C) ? B)What are savings (S) ? C)What is APC ? D)What is APS ?
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