The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

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Answer 1

Question

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

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Students have asked these similar questions

At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate). Students with early classes Students without early classes Coffee 70 60 Banana 50 100 The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? HINT: if you sell the bundle, can you make more by offering coffee separately? If so, what price should be charged for the bundle? (Show calculations)

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Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000. Group Value Frequency Baby boomers $5 20% Generation X $4 10% Generation Y $3 10% `Tweeners $2 10% Seniors $2 10% Others $0 40% ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.

Answer 2

Question

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

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Answer 3

Question

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

Answer 6

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

Answer 7

Chapter 18, Problem 1P

To determine

To explain:

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Answer 8

Expert Solution & Answer

Explanation of Solution

The demand of the money in the economy builds when the interest rate lags the equilibrium interest rate. In such situation, people will not invest in the bond market and will try to get a hold of the money as because of the fear of unprofitability. On the contrary, the requirement of the loan in the time period when the interest rate levels down will increase gradually resulting in the increment of the price of the loan.

The supply of the money in the economy builds when the interest rate exceeds the equilibrium interest rate because in such a situation, people will invest in the bond market and will try to spend the money in hand because of the probability of profit.On the contrary, the requirement of the loan in the time period when the interest rate levels up will increase gradually resulting in the decrement of the price of the loan.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Bond market and loan market:

A financial market where people are involved in the issuing of new debt is known as bond market.The issuing of debt occurs in the form of the bonds. The fastest growing market in the recent economies of the countries is the loan market where the organisations provide loans to the people who are interested in buying and even forwardly sell them to the investors.

Answer 12

Ch. 18 - Prob. 1P Ch. 18 - Prob. 2P Ch. 18 - Prob. 3P

The effect on the bond market and the loan market in the move from a below-equilibrium interest rate to the equilibrium interest rate. The effect on the bond market and the loan market in the move from an above −equilibrium interest rate to the equilibrium interest rate should also be explained.

Explanation of Solution

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Chapter 18 Solutions