An increase in money supply coupled with a disruption in the supply chain will often cause inflation True False

Q: An unbiased predictor of future exchange rates is a predictor that is almost always correct. True…

A: The prediction of future exchange rates plays a significant role in global financial markets and…

Q: In an inflationary economy, the use of FIFO maximizes the cost of goods sold and minimizes the cost…

A: In an inflationary economy, the prices of goods keep on rising until the economy slows down. Thus,…

Q: Explain negative inflation premium.

A: Negative inflation premium, also known as deflationary premium, refers to a situation where the…

Q: When the real rate of interest is less than the nominal rate of interest, then: Multiple Cholce…

A: The formula for nominal rate is as follows: Nominal rate=Real interest rate +Inflation rate

Q: In a complete sentence give an example of something that has been affected by inflation.

A: In finance inflation is the rate of increase in prices of goods and services over a time period. An…

Q: What is negative inflation premium

A: Negative inflation premium, also known as deflationary premium, refers to a situation where the…

Q: Discuss the argument that central banks should have a mandate for price  stability to prevent an…

A: The central bank is the banker's bank. It gives advice to the government Central bank assists in…

Q: Why should we try to control inflation or should we let the market take care of lowering price…

A: Inflation is a general increase in the price of goods and services over some period of time. It has…

Q: Central Banks are in fact not at fault when it comes to turning economy into recession and…

A: Each country has its own central bank and a country’s central bank has the power to control that…

Q: The concept that market forces in the macroeconomy can remedy a recession is referred to as:…

A: Monetary Policy- Monetary policy refers to the actions and communications of the central bank in…

Q: How does a high rate of inflation affect money in all its different roles?

A: Inflation: Inflation is a rate at which the price of the products and services rises. It frequently…

Q: Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?

A: Short Run: This refers to the factor of production where capital is fixed. The time period in such a…

Q: How will a decrease in time preferences affect the loanable funds market?   A.   There will be an…

A: Decrease in time preferences tells us that individuals in the economy are more patient and more…

Q: Too much money in an economy with too little goods and services creates:

A: High amount of money in the market with little goods or services will create an imbalance in the…

Q: he purpose of the inflation premium is to maintain the purchasing power of money while it is loaned…

A: a) An inflation premium is added to interest rates for compensating for expected inflation by…

Q: Required: d) True or False: When the peg is credible, recession will have a smaller adv impact on…

A: In peg the currency of nation is pegged to something like dollar or gold that exchange rate with…

Q: When the quantity of a financial security supplied or demanded changes at every given interest rate…

A: Explanation: Interest rate shifts (i.e., the price of financial capital) are creating a shift along…

Q: O a. None of the above Ob. Decrease in Money Supply O C. Increase in Money Supply d. No Change in…

A: Solution: Credit Creation Multiplier is a multiple which shows that how much multiple times the…

Q: Key indicators 5-year Annualized Return Quartile Ranking Volatility Management Expense Ratio (MER)…

A: Sharpe, is a measure used to calculate the risk-adjusted return on an investment portfolio. It is a…

Q: Which of the following basic accounting assumptions is threatened by the existence of severe…

A: Correct option is A i.e. Monetary unit assumption      Monetary unit assumption is a  basic…

Q: Bank charges is an example of a timing difference. True or False Interest on overdraft is an example…

A: A bank reconciliation statement compares an entity's bank account with its financial records by…

Q: Explain on the effects of rising inflation rates on the economy. How can the rising inflation rate…

A: By boosting the prices of the products inflation generally reduces your purchasing power. Inflation…

Q: A change in money demand or a shift in the money demand curve is caused by a change in * the…

A: the increase demand of money shift the demand curve up.

Q: Why do some people say that MIRR should stand for Meaningless Internal Rate of Return?

A: Question is based on the concept of Business Finance

Q: What makes it so difficult to correctly forecast interest rate changes?

A: Interest rates are used to understand price and value of money. Interest rate is the cost incurred…

Q: What is the basic accounting problem created by the monetary unit assumption when there is…

A: The Financial Accounting Standards Board (FASB) is known as the is private, non-profit organization…

Q: Inflation is a general rise in market prices that affects all goods equally. OA. True OB. False

A: Market prices refer to the prices that are prevailing in the market of goods and services. It is…

Q: As inflation increases, the impact of the tilt effect is said to become even more burdensome on…

A: Inflation: A situation where the prices of the commodities rises, and the value of the dollar…

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.