18. Suppose businesses become more optimistic about their future profitability after a new businessfriendly president is...
18. Suppose businesses become more optimistic about their future profitability after a new businessfriendly president is elected. According to Ch. 3, the equilibrium level of investment spending (I) 4 a. will increase and the real interest rate (r) will increase. b. will not change and the real interest rate will increase. c. and the real interest rate will both be unchanged. d. will decrease and the real interest rate will increase
Homework Answers
"A"
This will shift the loanable fund demand curve to the right and the new equilibrium will be at a higher price and higher interest rate. the interest rate will increase. the answer is "A".
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18. Suppose businesses become more optimistic about their future
profitability after a new businessfriendly president is...
i need answers and explanations 35. With the low unemployment rate, households become more optimistic about...
i need answers and explanations
35. With the low unemployment rate, households become more optimistic about the future economy and decide to increase their spending on durable goods such as automobiles. According to the model of the market for loanable funds, A) real interest rate and the quantity of loanable funds will remain unchanged. B) real interest rate will increase and the quantity of loanable funds will decrease. C) real interest rate will decrease and the quantity of loanable funds...
24) Suppose the economy is at full employment and firms become more optimistic about the future...
24) Suppose the economy is at full employment and firms become more optimistic about the future profitability of new investment. Which of the following will happen in the short run? a. Aggregate demand will shift to the left. b. Output will decline. c. Unemployment will decline. d. Prices will decline.
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co...
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co decrease and government spending is unchanged a consumption and investment both increase b. consumption and investment both decrease c consumption increases and investment decreases d. consumption decreases and investment increases. 7. Suppose a business-friendly billionaire becomes president. As a result, businesses become optimistic about the future and more eager than before to increase their investment spending According to the classical long-run macroeconomic model of...
Suppose increased concerns about terrorism make firms less optimistic about the future marginal revenue products of...
Suppose increased concerns about terrorism make firms less optimistic about the future marginal revenue products of capital. What will be the impact on the economy’s normal real interest rate and normal investment?
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
Use the loanable funds market to illustrate the effect of the following events on the equilibrium....
Use the loanable funds market to illustrate the effect of the following events on the equilibrium. Illustrate the effects on the interest rate and quantity of investment-savings (explain thoroughly): At any given interest rate, businesses become very optimistic about the future profitability of investment spending (assume the budget balance is zero).
Panem is a small open economy. Its residents has become more optimistic about their future. What...
Panem is a small open economy. Its residents has become more optimistic about their future. What will happen to Panem’s trade balance and real exchange rate? Explain using your own words and a figure.
1. Suppose that Brazilianfirms become more optimistic and decide to increase investment expenditure today in new factori...
1. Suppose that Brazilianfirms become more optimistic and decide to increase investment expenditure today in new factories and office space.How will this increase in investment affect Brazilian output, interest rates, and the current account?
The graph models an economy in equilibrium with a real GDP of $180 billion. Suppose that...
The graph models an economy in equilibrium with a real GDP of $180 billion. Suppose that consumers' expectations about future incomes change, causing unplanned inventory investment to increase by $30 billion. Shift the planned agregate expenditure (AE) line to show the effect of this change. Planned aggregate spending (billions of dollars) 0 30 240 270 300 60 90 120 150 180 210 Real GDP billions of dollars) Planned aggregate spendin 0 30 60 90 120 150 180 210 Real GDP...
Use the loanable funds market to illustrate the effect of the following events on the equilibrium....
Use the loanable funds market to illustrate the effect of the following events on the equilibrium. Illustrate the effects on the interest rate and quantity of investment-savings (explain thoroughly): a) The proportion of retired people in the population goes up. Think that usually retired people generally save less than working people at any interest rate. b) At any given interest rate, consumers decide to save more (assume the budget balance is zero). c) At any given interest rate, businesses become...
i need answers and explanations
35. With the low unemployment rate, households become more optimistic about the future economy and decide to increase their spending on durable goods such as automobiles. According to the model of the market for loanable funds, A) real interest rate and the quantity of loanable funds will remain unchanged. B) real interest rate will increase and the quantity of loanable funds will decrease. C) real interest rate will decrease and the quantity of loanable funds...
of a closed economy. when 6. According to the classical long-run macroeconomic model of a co decrease and government spending is unchanged a consumption and investment both increase b. consumption and investment both decrease c consumption increases and investment decreases d. consumption decreases and investment increases. 7. Suppose a business-friendly billionaire becomes president. As a result, businesses become optimistic about the future and more eager than before to increase their investment spending According to the classical long-run macroeconomic model of...
Suppose the US economy is at Potential GDP. Then, consumers and firms become pessimistic about future economic conditions, and consumption and investment decrease. In response to the decline in consumption and investment, the FED increases the money supply. Congress responds as well approving an increase in government spending and tax cuts. Illustrate this sequence of events using an Aggregate Demand/Aggregate Supply graph. State what happens with Real GDP, Prices, and the Unemployment rate after monetary and fiscal policies are implemented.
The graph models an economy in equilibrium with a real GDP of $180 billion. Suppose that consumers' expectations about future incomes change, causing unplanned inventory investment to increase by $30 billion. Shift the planned agregate expenditure (AE) line to show the effect of this change. Planned aggregate spending (billions of dollars) 0 30 240 270 300 60 90 120 150 180 210 Real GDP billions of dollars) Planned aggregate spendin 0 30 60 90 120 150 180 210 Real GDP...
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