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- 12. Which of the following is most likely to cause an increase in demand for loanable funds? (A) Banks fail across the nation, and are unable to return their depositors’ money. (B) The Financial Post releases a widely-read article, claiming that consumer and business confidence have declined. (C) The government provides a large tax credit for those who save money in banks. (D) The government reduces taxes on businesses, making investment more profitable.Q) . __________ are an efficient and convenient way for governments and corporations to borrow large sums of money from investors for a long period of time. Credit cards, Stocks, Bonds, Bank loans Explains it correctlyQ) . __________ are an efficient and convenient way for governments and corporations to borrow large sums of money from investors for a long period of time. Credit cards, Stocks, Bonds, Bank loans
- 17. What makes up the supply curve in the loanable funds market? Why does this curve have a positive relationship with the real interest rate?6. Answer all of the following: As a first-year student, you need to borrow £40,000 in order to finance your university education. You intend to repay this loan over time after you graduate. Explain why seeking out an individual saver to borrow money from could be problematic. Then identify which service a bank provides to the economy that eliminates this problem. (a) (b) Borrowing from the central bank or other banks is a short-term solution for a bank when it is illiquid. What do you think would be a more long-term solution if a bank is persistently illiquid? (c) Why is the short-term interest rate equal to the base rate?Scenario 1: The economy enters a recession driving down the demand for homes nationwide. 1. What is the expected impact on the demand for loanable funds? 2. What effect will this change have on the interest rate? 3. How will this change the behavior of consumers?
- Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for millions of Americans. Causing Americans to save more. 1. What is the likely effect of this increase in income on the supply of loanable funds? 2. What effect will this change have on the interest rate? 3. How will this change the behavior of consumers?Scenario 3: Unemployment decreases throughout the country causing a dramatic increase in income for millions of Americans. Causing Americans to save more. 1. What is the likely effect of this increase in income on the supply of loanable funds? 2. What effect will this change have on the interest rate?What is the significance of financial markets in the country’s economy?
- ctri alt alt ctrl Economics - Chapter 11 Section Review WHAT STEPS WOULD YOU TAKE TO PURCHASE A BOND AND How WOULD YOU SECURE A RETURN? RECIEVE A RETURN HOW IS BUYING A U.S. SAVINGS BOND LIKE LOANING MONEY TO THE U.S. GOVERNMENT1. What is the relationship between the time value of money and inflation? 2. Compare simple interest to compound interest. 3. What are the advantages and disadvantages of a fixed principal, fixed interest loan? 4. What is the purpose of a bridge loan? 5. Distinguish between bank discount and simple interest.6. Differentiate between a stated rate of interest and an effective rate of interest. 7. What is the significance of finding the internal rate of return (IRR)? 8. Jill Kramer borrowed $25,000 to pay for a startup business. Jill must repay the loan at the end of five months in one payment with a 6 percent simple interest rate.What is the total amount that Jill must repay in five months?How much interest does Jill repay?9. Joe Jones went to his bank to find out how long it will take for $1,000 to amount to $1,350 at 9 percent simple interest. Solve Joe's problem.1. What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens
