1. Prepare a flowchart explaining the interrelation between the concepts: a. Interest rate b. Investment
1. Prepare a flowchart explaining the interrelation between the concepts:
a. Interest rate
b. InvestmentHomework Answers
Ans…..
Changes in interest rates affect the public's demand for goods and services and, thus, aggregate investment spending. A decrease in interest rates lowers the cost of borrowing, which encourages businesses to increase investment spending.
The level of investment in the economy is sensitive to changes in the prevailing interest rate. In general, if interest rates are high, investment decreases. Conversely, if interest rates are low, investment increases. This inverse correlation is key in understanding the relationship between the interest rate and investment.
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1. Prepare a flowchart explaining the interrelation between the concepts:
a. Interest rate
b. Investment
Prepare an organization chart explaining the interrelation between the concepts: A. Saving B. Investment C. Present...
Prepare an organization chart explaining the interrelation between the concepts: A. Saving B. Investment C. Present consumption versus future consumption
Explain the difference between the interest rate used in an investment and the rate of return...
Explain the difference between the interest rate used in an investment and the rate of return of the investment. What is the relationship between IRR and MARR? When costs equal benefits (during the same time) what is the present value of the investment? Define rate of return analysis List one advantage of rate of return analysis
Exhibit: Saving, Investment, and the Interest Rate 1 Saving. S Real interest rate, Desired investment S...
Exhibit: Saving, Investment, and the Interest Rate 1 Saving. S Real interest rate, Desired investment S Saving investment The economy begins in equilibrium at point E, representing the real interest rate at which saving S; equals desired investment Is What will be the new equilibrium combination of real interest rate, saving, and investment if the government cuts spending, holding other factors constant? O point A O point O point D O point B
Explain using a graph the relationship between investment and interest rate . show on the graph...
Explain using a graph the relationship between investment and interest rate . show on the graph how expansionary fiscal policy can have a negative impact on the level of investment
For the investment situation below, identify the annual interest rate, the length of the investment in...
For the investment situation below, identify the annual interest rate, the length of the investment in years, the periodic interest rate, and the number of periods of the investment. 4% compounded quarterly for 10 years (a) the annual interest rate (b) the length of the investment in years yr (c) the periodic interest rate (d) the number of periods of the investment periods
Please use two economic concepts. Thank u. What's the relationship between savings and investment? What's the...
Please use two economic concepts. Thank u. What's the relationship between savings and investment? What's the relationship between investment and economic growth?
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b....
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b. What are the reasons for very high nominal interest rates in the 1980s? c. Explain ex-ante real rate and ex-post real rate.
Figure 14.10c depicts the aggregate investment function of an economy. Interest rate, profit rate (%) Investment...
Figure 14.10c depicts the aggregate investment function of an economy. Interest rate, profit rate (%) Investment (1. higher profit expectations Investment (1) holding profit expectations constant Investment Based on this information, which of the following statements is correct? Ceteris paribus, an increase in the interest rate would lead to a fall in investment due to an inward shift of the investment line. A steeper line indicates the higher sensitivity of the level of aggregate investment to changes in interest rate....
1. Prepare a comparative table of the following concepts: a. Average Propensity to Consume b. Average...
1. Prepare a comparative table of the following concepts: a. Average Propensity to Consume b. Average propensity to save
1) Suppose the interest rate is 12% - consider an investment opportunity that returns $6,500 over...
1) Suppose the interest rate is 12% - consider an investment opportunity that returns $6,500 over four years as follows: the investment pays $500 after the first year; $1000 after the second year; $2000 after the third year; and $3,000 at the end of the fourth year. Should you invest $5,000 into this project? NO: the present value of this investment is less than $5,000 MAYBE: the present value of this investment is equal to $5,000 YES: the present value...
Exhibit: Saving, Investment, and the Interest Rate 1 Saving. S Real interest rate, Desired investment S Saving investment The economy begins in equilibrium at point E, representing the real interest rate at which saving S; equals desired investment Is What will be the new equilibrium combination of real interest rate, saving, and investment if the government cuts spending, holding other factors constant? O point A O point O point D O point B
For the investment situation below, identify the annual interest rate, the length of the investment in years, the periodic interest rate, and the number of periods of the investment. 4% compounded quarterly for 10 years (a) the annual interest rate (b) the length of the investment in years yr (c) the periodic interest rate (d) the number of periods of the investment periods
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b. What are the reasons for very high nominal interest rates in the 1980s? c. Explain ex-ante real rate and ex-post real rate.
Figure 14.10c depicts the aggregate investment function of an economy. Interest rate, profit rate (%) Investment (1. higher profit expectations Investment (1) holding profit expectations constant Investment Based on this information, which of the following statements is correct? Ceteris paribus, an increase in the interest rate would lead to a fall in investment due to an inward shift of the investment line. A steeper line indicates the higher sensitivity of the level of aggregate investment to changes in interest rate....
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