What are the major economic functions of the interest rate? How might the fact that many businesses fifinance their investment activities internally affect the effifi ciency with which the interest rate performs its functions?

Q: (M/P) d=Y-20r. M = 600. P = 2. 1. What are the equilibrium level of income and the equilibrium…

A: The equilibrium level of income is the point at which a business is able to sell all of the goods it…

Q: Suppose a handbill publisher can buy a new duplicating machine for $ 500  and the duplicator has a…

A: In the question, the handbill publisher can buy a new duplicating machine that would help to cost to…

Q: Use the analysis for the market for loanable funds diagram to illustrate and explain how the…

A: Hi, thank you for the question. As per the guidelines, we are allowed to attempt only one question…

Q: Over the last 25 years, real interest rates in the developed world have O have increased have fallen…

A: When a borrower repays a loan with interest, the real interest rate represents the percentage gain…

Q: The IS relation means that the output increase leads to an interest rate decrease. TRUE or FALSE?…

A: IS curve denotes the relationship between interest rate and output level in the economy.

Q: Consider following equations:                                     Y=C + I +G…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: -Explain how a consumption tax could lead to a decrease in real interest rates.

A: Consumption is the share of income that consumer spends and not save. The income of a consumer is…

Q: When making decisions about saving and borrowing, people care most about O a) the nominal rate of…

A: In an economy, people make their consumption and savings decisions based on their income level and…

Q: c) Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap…

A: a. The equilibrium interest rate occurs at the point where the demand for money is equal to the…

Q: Assume that the loanable funds market is in equilibrium, as shown in the graph. If households become…

A: In the market of loanable funds, the price is considered to be the rate of interest and money is the…

Q: Bond A pays $8,000 in 20 years. Bond B pays $8,000in 40 years. (To keep things simple, assume that…

A: The interest rate is given as 3.5% The present value of the bonds can be calculated from the…

Q: he eco

A: Government expenditure or spending tends to includes all investment, government consumption and also…

Q: Consider a individual who currently earns $20,000 as an unskilled laborer. Suppose that by ttaking…

A: An investment is the acquisition of things that are not used today but will be utilized to build…

Q: Suppose the government borrows $20 million more next year than this year.   Answer questions d and e…

A: since you have asked multiple questions and according to policy we can solve only 1 question and for…

Q: What is the relationship; remember how economist talk about relationships, between the level of…

A: The equilibrium of the national income including the real GDP and the price level would be…

Q: Suppose, the government of Australia incurs a budget deficit of $50 billion due to increased…

A: A budget deficit tends to occur when the expenses tend to exceed revenue and it indicates the…

Q: Assume that Clem is an individual who has current income of $26 898 and expected future income of…

A: Given, Income in period 1 = Y1 = $26,898  Income in future or period 2 = Y2 = $59,968 Wealth in…

Q: For each of the following pairs, which bond wouldyou expect to pay a higher interest rate?…

A: a) Risk and return are directly related. The higher the risk, the more would be the return. In this…

Q: An increase in interest rate always lowers the net interest income (NII) of a bank. Is this…

A: Net interest income (NII) refers to income earned by the banks that is determined by the difference…

Q: Consider a period in which stock prices are very high, such that investors begin to think that…

A: Equilibrium in the loanable funds market is at such interest rate where quantity of loanable funds…

Q: re limits on interest rate a good idea?

A: - A limit on interest rate is considered to be a good idea by several economists. The limit is…

Q: nheducation.com/flow/connect.html 10 Homework Saved Help Save & E Refer to the table below and…

A: It is mentioned that the expected rate of interest declines by 2% and if the rate of real interest…

Q: (a) You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the…

A: (a) Given information: Current interest rate = i Coupon received in perpetuity = C The price of…

Q: Suppose the economy moves into recession and there is general pessimism about the future economic…

A: A Fall in the GDP for consecutive two quarter is known as the recession. The aggregate demand…

Q: On the following graph, use the orange points (square symbol) to plot the nominal interest rates for…

A: The real interest rate for 2014 can be calculated as follows: Thus the value of 2014 real interest…

Q: Who benefits from an increase in interest rates? O people who are borrowing money O no one O people…

A: Interest rate: The interest rate is the rate or the proportion of an amount the lender or bank…

Q: This person earns $1000 of income today and $2000 income next year. Point C represents his…

A: As per given information, we can say Y1=$1000, Y2=$2000, r=10%=0.01  The intertemporal budget…

Q: Which of the following would1 the Qd of LF? Select one: O A. expected profit decreases. B. the real…

A: The loanable funds concept is a market interest rate hypothesis in economics. The interest rate is…

Q: The importance of income in determining savings has persisted since the time of Keynes. Why have…

A: Keynes: It refers to the economic theory under which economy's total spending and its effect are…

Q: an increase in the expected real interest rate tends to raise desired saving, but lower desired…

A: The change in the expected real interest rate affects the level of saving and investment in the…

Q: Drive the is curve mathematically anf graphically when investment function is more sensitive to rate…

A: The IS curve shows the different combinations of interest rate and income where the goods market is…

Q: . What are the various factors that affect the cost ofmoney and hence interest rates? How will…

A: The cost of money is the interest rate that is required to be paid for borrowing the money from the…

Q: The general case of interest rate is simple interest rate. Select one: O True O False

A: The rate of interest is the percentage (%) of a loaned sum that a lender charges the borrower as…

Q: The sellers (or lenders) in financial markets are a) not concerned with the interest rate in the…

A: A financial market is the place for the people to act as a lender or borrow, according to their…

Q: Consider an economy described by the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000…

A: given data Y=7000 G=4000 T=2000 C=150+0.75(Y-T) I=1000-50r now G is rising by 1000.

Q: Suppose that the interest rate is 5 percent. Enter your answers rounded to 2 decimal places. A.…

A: Future vale refers to the amount today that will be worth at a certain point in the future

Q: d) Now suppose that instead of y = 100, the consumer has y = 140. Again, determine optimal…

A: The lifetime budget constraint is Y1 + {Y2/(1 + r)} = C1 + {C2/(1 + r)}

Q: The table below is broken down by Month, Real Interest Rate (%), Loanable of $), Exogenous Change,…

A: The classical theory of interest rate would depend on the loanable funds theory of interest rate.…

Q: Suppose that you eam $250 in year 1 and will eam $448 in year 2. If you borrow mòney against your…

A: Given information: Earning in Year 1 = $250Earning in Year 2 = $448 If money is borrowed against…

Q: What is the relationship; remember how economist talk about relationships, between the level of…

A: Economics is the study of various economic relationships. Relationship means it shows the connection…

Q: a) You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the…

A: Given: Consol that pays a coupon (C) in the perpetuity  The current interest rate is: i The…