Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 29, Problem 15QP
(a)
To determine
Identify the effect of advanced technology on the people’s rate of time preference and on the interest rate.
(b)
To determine
Identify the effect of an increased threat of war on the people’s rate of time preference and on the interest rate.
(c)
To determine
Identify the effect of growing older on the people’s rate of time preference and on the interest rate.
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Chapter 29 Solutions
Economics (MindTap Course List)
Ch. 29.1 - Prob. 1STCh. 29.1 - Prob. 2STCh. 29.1 - Prob. 3STCh. 29.1 - Prob. 4STCh. 29.2 - Prob. 1STCh. 29.2 - Prob. 2STCh. 29.2 - Prob. 3STCh. 29.4 - Prob. 1STCh. 29.4 - Prob. 2STCh. 29.4 - Prob. 3ST
Ch. 29.4 - Prob. 4STCh. 29 - Prob. 1QPCh. 29 - Prob. 2QPCh. 29 - Prob. 3QPCh. 29 - Prob. 4QPCh. 29 - Prob. 5QPCh. 29 - Prob. 6QPCh. 29 - Prob. 7QPCh. 29 - Prob. 8QPCh. 29 - Prob. 9QPCh. 29 - Prob. 10QPCh. 29 - Prob. 11QPCh. 29 - Prob. 12QPCh. 29 - Prob. 13QPCh. 29 - Prob. 14QPCh. 29 - Prob. 15QPCh. 29 - Prob. 16QPCh. 29 - Prob. 17QPCh. 29 - Prob. 1WNGCh. 29 - Prob. 2WNGCh. 29 - Prob. 3WNG
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- explain each factors of interest ratearrow_forwardOptimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.75% at a time when inflation is around 1.65%. For the average saver, the real rate of interest on his or her savings is .......???%. (Round your response to two decimal places and use a minus sign if necessary.) If banks expect that the rate of inflation in the coming year will be 4.65% and they want a real return of 7.5% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is .......???%. (Round your response to two decimal places.) If the economy experiences an unexpectedly low rate of inflation, the group that would tend to benefit is ___________. A. debtors (people or businesses who owe money). B. creditors (people or institutions that are owed money). C. both would benefit equally. D. neither benefits.arrow_forwardPlease answer both subparts.arrow_forward
- Evaluate (discussing positives and negatives of) the effect of interest rates on consumer choices.arrow_forwardA retired woman has $50,000 to invest but needs to make $6,000 a year from the interest to meet certain living expenses. One bond investment pays 15% simple annual interest. The rest of it she wants to put in a CD that pays 7% simple interest. a) Let x be the amount the woman invests in the 15% bond. Write an expression, in terms of x, that tells how much the woman invests in the CD. b) Set up an equation that can be used to determine how much the woman should invest in each option to earn $6,000 per year in interest. c) Solve the equation from part b) to determine how much should be invested in each option.arrow_forwardWhat group of people benefits from a higher interest rate? Explain how they benefit.arrow_forward
- Angela puts $5,000 in a savings account that pays 5 percent per year. The future value of her money one year from now is $ As the interest rate (Enter your response as a whole number.) the future value of Angela's $5,000 savings will increase.arrow_forwardFrank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a real return of 4 percent per year. Instructions: Enter your responses as whole numbers. a. The CPI (times 100) is 100 at the time that Frank makes the loan. It is expected to be 109 in one year and 118.8 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be %. b. Suppose Frank and Sarah are unsure about what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 4 percent rate of return? Frank should charge Sarah % (Click to select) more than equal to less than the inflation rate.arrow_forwardSuppose that the interest rate is 4 percent. Instructions: Enter your answers rounded to 2 decimal places. a. What is the future value of $100 four years from now? $ How much of the future value is total interest? $ b. By how much would total interest be greater at an interest rate of 6 percent than at an interest rate of 4 percent? %24arrow_forward
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