Show in a graph and explain what happens to the nominal interest rate, everything else held constant, using the liquidity preference theory. There is an increase in a nation’s income.
Show in a graph and explain what happens to the nominal interest rate, everything else held...
Draw a graph and explain what happens to the real interest rate in the United States by using a loanable funds model, everything else held constant. A new wave of computer technology in the United States has been shown to greatly increase worker productivity.
Section 4.2: Determinants of the Interest Rate in the Loanable Funds Theory For each question in this section, draw a graph and explain what happens to the real interest rate in the United States by using the Loanable Funds model, everything else held constant. 2. U.S. citizens believe that Japan’s economy is about to grow at a much slower pace next year.
14. If wealth increases, the demand for stocks and that of long-term bonds everything else held constant. A) increases, increases B) increases, decreases C) decreases; decreases D) decreases, increases 15. Everything else held constant, if the expected return on U.S. Treasury bonds falls from 10 to 5 percent and the expected return on GE stock rises from 7 to 8 percent, then the expected return of holding GE stock relative to U.S. Treasury bonds and the demand for GE stock...
If expected inflation is constant, then when the nominal interest rate falls, the real interest rate O A. falls by more than the change in the nominal interest rate. falls by the change in the nominal interest rate. Oc rises by the change in the nominal interest rate. OD.rises by more than the change in the nominal interest rate. QUESTION 15 According to liquidity preference theory, if there were a surplus of money, then O A. the interest rate would...
Using a graph representing the market for loanable funds, show and explain what happens to interest rates and investment if a government goes from a deficit to a surplus.
Assuming everything else constant, what would happen to equalibirum real interest rates and equalibrium quantity of loans traded, if there is an increase in expected future income in the exonomy (consumers expect higher levels of future income)?
5. Nominal interest rates and yield curves Economic forecasters predict that the rate of inflation will hold steady at 2% per year indefinitely. The table below shows the nominal interest rate paid on Treasury securities having different maturities.Maturity Nominal rate of return3 months 5%2 years 6 5 years 8 10 years 8.520 years 9 Approximately what real interest rate do Treasury securities offer investors at each maturity? If the nominal rate of interest paid by every Treasury security above...
short answer required 3. Suppose that velocity of money and output are . Gulf constant and the fresher effect both hold what happens to inflation real interest rate and nominal interest rate when the money supply growth rate increases from (096) to (5%)? 4. Why might a favorable change to the economy such as technological change or a decrease in the price of imported oil be associated with an increase frictional unemployment? 5. How young population effect economic development? 6....
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...
U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theory, investors will move their funds from U.S. to Canada because they earn a better interest rate, therefore, demand for Canadian $ will increase, so Canadian $ will appreciate, and $ will depreciate. According to the fishier effect, real interest rate is assumed to usually be in equilibrium. So, Nominal Interest Rate = Real Interest Rate + Expected Inflation U.S. 4% = 3% + 1%...