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.

Question

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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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A firm operates with the production function Q = K2 L. Q is the number of units of output per day when the firm rents K units of capital and employs L workers each day. The manager has been given a production target: to produce 8,000 units per day. She knows that the daily rental price of capital is $400 per unit and the wage rate is $200 day. a. What is the returns to scale of this production function? Show mathematically. b. Currently the firm employs 80 workers per day. What is the firm’s daily total cost if it rents just enough capital to produce at its target? c. Compare the marginal product per dollar spent on K and on L when the firm operates at the input choice in part (b). What does this suggest about the way the firm might change its choice of K and L if it wants to reduce the total cost in meeting its target? Explain your answer very clearly. d. In the long run, how much K and L should the firm choose if it wants to minimize the cost of producing 8,000 units of output a day?…

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.

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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 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 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