Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 2, Problem 8SPPA
To determine
To explain:
The real flow and money flow with the help of the circular flow model.
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Students have asked these similar questions
Draw a graph depicting interest rates at the quantity of loanable funds. Answer the following questions regarding this graph.
Explain why the supply of loanable funds is upward sloping.
Explain why the demand of loanable funds is downward sloping.
If the Federal Reserve sells government bonds, show what will happen to this graph. Explain the effects on interest rates and the quantity of loanable funds.
If the Federal Reserve lowers the required reserve rate, show what will happen to this graph. Explain the effects on interest rates and the quantity of loanable funds.
Money is regarded as a factor of production. Do you agree with this statement? Support your answer with reasons.
Use the table about Hikaru and his parents to answer the question.
Table: Hikaru and His Parents
His parents do not pay
Hikaru's college tuition.
Hikaru starts college right
high school and saves most of after high school with no debt after high school with no debt
His parents agree to pay
Hikaru's college tuition.
Hikaru starts college right
Hikaru works part-time in
his income.
and has savings when he
graduates from college.
for at least one year.
Hikaru does not work or save Hikaru starts college right
in high school.
Hikaru takes out a student
loan or delays college.
after high school with no
debt.
What is this kind of table called?
a game matrix
an outcome matrix
an interaction table
O a payoff table
Chapter 2 Solutions
Foundations of Economics (8th Edition)
Ch. 2 - Prob. 1SPPACh. 2 - Prob. 2SPPACh. 2 - Prob. 3SPPACh. 2 - Prob. 4SPPACh. 2 - Prob. 5SPPACh. 2 - Prob. 6SPPACh. 2 - Prob. 7SPPACh. 2 - Prob. 8SPPACh. 2 - Prob. 9SPPACh. 2 - Prob. 10SPPA
Ch. 2 - Prob. 1IAPACh. 2 - Prob. 2IAPACh. 2 - Prob. 3IAPACh. 2 - Prob. 4IAPACh. 2 - Prob. 5IAPACh. 2 - Prob. 6IAPACh. 2 - Prob. 7IAPACh. 2 - Prob. 8IAPACh. 2 - Prob. 9IAPACh. 2 - Prob. 10IAPACh. 2 - Prob. 11IAPACh. 2 - Prob. 1MCQCh. 2 - Prob. 2MCQCh. 2 - Prob. 3MCQCh. 2 - Prob. 4MCQCh. 2 - Prob. 5MCQCh. 2 - Prob. 6MCQCh. 2 - Prob. 7MCQ
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Similar questions
- EXERCISE 10.9 LIMITS ON LENDING Many countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For Question 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For Question 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).arrow_forwardWhat are some drivers for companies to engage in the circular economy?arrow_forwardInterest rates are important in explaining economic activity. A. Using a correctly labeled graph of the money market, show how an increase in the income level will affect the nominal interest rate in the short run. B. Using a correctly labeled graph of the loanable funds market, show how a decision by households to increase saving for retirement will affect the real interest rate in the short run.arrow_forward
- Using the Circular flow of money and goods, discuss how decisions in a household affected the economic flow during this pandemic.arrow_forwardFor each of the following economic changes, predict what will happen to equilibrium interest rate and quantity of money in the financial market. Sketch a demand and supply diagram to support your answers. Banks that have made loans find that a larger number of people than they expected are not repaying those loans. 2.Because of the pandemic, people become uncertain about their economic future. 3. BSP buys dollars from the public to increase its foreign exchange reserves.arrow_forwardMacroeconomic:arrow_forward
- 3. Read the quote below. Then answer the following questions. [Beginning of Quote] Europeans Are Paid to Borrow but Get a Bill for Trying to Save. By DANNY HAKIM and PETER EAVIS. NYT, link. HVIDOVRE, Denmark-At first, Eva Christiansen barely noticed the number. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small-business loan. She whooped. She danced. A friend took pictures. "I think I was so happy I got the loan, I didn't hear everything he said," she recalled. And then she was told again about her interest rate. It was -0.0172 percent per year-less than zero. While there would be fees to pay, the bank would also pay interest to her. It was just a little over $1 a month, but still. [End of Quote] (a) How large was the loan that was approved? 1 (b) Given the information provided, can you conclude that overall the interest rate at which Ms. Christiansen is borrowing is negative? Is there a pure arbitrage opportunity one could…arrow_forwardFor each of the following lettered events illustrate graphically and summarize the changes in "i" and total lending as demonstrated in class. Note: each letter should be considered independent of the other letters and worked on separate graphs. Label completely. a. Graphically illustrate and explain the impact on i and q if Alexandria Ocasio-Cortez (AOC) becomes President and begins her plan to "print" money to pay for everything we need even though the Fed warns her that this will likely result in annual inflation going from 6% to 25% per year. Use the bond supply/bond demand model S q D : Net change: i qarrow_forwardMany countries have policies that limit how much interest a moneylender can charge on a loan. Do you think these limits are a good idea? Who benefits from the laws and who loses? What are likely to be the long-term effects of such laws? Tips: For part 2, you may think about how a low interest rate would affect the poor and those who owe huge debts. For part 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).arrow_forward
- Recently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase.arrow_forwardRecently, the economies of North Korea and Norway have begun to grow very rapidly. This increases their citizens’ income and wealth as well. In turn, these citizens increase their savings not only in their country, but also in the United States. In this case, which of the following statements is correct? A. The supply of loanable funds decreases as savings increase. B. The supply of loanable funds increases as savings increase. C. The demand of loanable funds decreases as savings increase. D. Both supply and demand of loanable funds increase as savings increase. Clear my choicearrow_forwardWhat does the phrase “inflation is always and everywhere a monetary phenomenon” mean? Printing more money is the main cause of deflation in the economy. Printing less money is the main cause of higher inflation rates in the economy. Increasing the money supply is the main cause of higher inflation rates in the economy. Printing more money is the main cause of a higher standard of living because everyone gets more money to spend so inflation doesn’t matter.arrow_forward
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