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 26, 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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16:10 ← BEC 3701 - Assignments-... KWAME NKRUMAH UNIVERSITY TEACHING FOR EXCELLENCE SCHOOL OF BUSINESS STUDIES DEPARTMENT OF ECONOMICS AND FINANCE ADVANCED MICRO-ECONOMICS (BEC 3701) Assignments INSTRUCTIONS: Check instructions below: LTE 1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of the following: a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks] b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks] c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks] d) the Expenditure Function E(P1, P2, U°) [3 Marks] e) Draw a diagram of the solution. There should be two graphs, one above the other; the first containing the indifference curves and budget constraint that characterize the solution to the consumer's choice problem; the second characterizing the demand…

How would you answer the question in the News Wire “Future Living Standards”? Why?

al Problems (v) T (ix) F 1. Out of total number of 2807 women, who were interviewed for employment in a textile factory, 912 were from textile areas and the rest from non-textile areas. Amongst the married women, who belonged to textile areas, 347 were having some work experience and 173 did not have work experience, while for non-textile areas the corresponding figures were 199 and 670 respectively. The total number of women having no experience was 1841 of whom 311 resided in textile areas. Of the total number of women, 1418 were unmarried and of these the number of women having experience in the textile and non-textile areas was 254 and 166 respectively. Tabulate the above information. [CA. (Foundation), May 2000 Exactly (14) of the total employees of a sugar mill were these were married and one-half

Answer 2

Question

Chapter 26, 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 3

Question

Chapter 26, 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.

Want to see more full solutions like this?

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

Answer 4

Question

Chapter 26, 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.

Want to see more full solutions like this?

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

Answer 5

Chapter 26, 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 26, 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 26, 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. 26 - Prob. 1P Ch. 26 - Prob. 2P Ch. 26 - 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 26 Solutions