According to Fisher's interest rate theory, the level of interest depends on people's time preference for funds and investment opportunities in the market.
Question: Try to use this theory to explain the change (rising or falling) of interest rates in THAILAND in recent years.
The interest rates in thailand have fallen in the past years and there are few reasons that are mentioned by the government.
1. Tourism sector
Tourism sector have taken a hit in the country. Thailand is famous for its tourism if a country like thailand does not get enough tourist in a period of time things start to change in the economy.
2. Fischer theory
It also plays a role in downfall of the interest rates. As there is no income out of tourist the local are not able to get the income they want for living. People are taking away their investment from the banks and if their is no extra money with the public, where will they invest??
According to Fisher's interest rate theory, the level of interest depends on people's time preference for...
7. According to the theory of liquidity preference, decreasing the money supply will nominal interest rates in the short run, and, according to the Fisher effect, decreasing the money supply will nominal interest rates in the long run. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 8. If neither investment nor consumption depends on the interest rate, then the IS curve is , and_ policy has no effect on output. A) vertical; monetary B) horizontal; monetary...
36. According to liquidity-preference theory, why is the g? money-demand curve downward slopin a. because interest rates rise as the Bank the qua b. because interest rates fall as the Bank of Canada reduces the supp c. because people will want to hold less money as the cost of doing so d. because people will want to hold more money as the cost of doing rest rates fall as the ofCanada reduces the quantity of money demanded anada reduces the...
SULOTION If the pure rate of time preference is 1%, the elasticity of the marginal utility of consumption is 2, and economic growth 4%, what is the social discount rate? 01% ООО QUESTION 28 In the context of long-term environmental change, are capital markets perfect? Yes, they reflect preferences for investment now versus investment later O Yes, they are based on many persons decisions about savings and investment O No, interest rates in capital markets are lower than individual interest...
2. The theory of liquidity preference and the
downward-slopingaggregate demand curve
The following graph shows the money market in a hypothetical
economy. The central bank in this economy is called the Fed. Assume
that the Fed fixes the quantity of money supplied.
Suppose the price level increases from 90 to 105.
Shift the appropriate curve on the graph to show the impact of
an increase in the overall price level on the market for money.
After the increase in the...
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