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Answer: Loanable Funds Graph The loanable funds graph is a representation of the supply and demand of money in an economy. It shows how much money is available for borrowing and how much is being lent out, and how changes

Summary The book Thirteen Reasons Why by Jay Asher follows the story of high school student Clay Jensen as he unravels the mystery of why his former classmate and crush Hannah Baker committed suicide. The novel contains several passages that

Loanable Funds Graph 1-1.jpg: Summary The graph above shows a hypothetical loanable funds market at equilibrium. If the government announces that it will reduce the inflation rate to 1 percent, according to Fisher’s theory, this will create an excess supply

Answer The graph above is a hypothetical loanable funds market. It is currently in equilibrium, with lenders and borrowers expecting an inflation rate of 2% and the nominal interest rate at 4%. If oil prices increase, lenders and borrowers revise

What Are Loanable Funds? Loanable funds are the total amount of money available for borrowing from both households and businesses within a given economy. This money can be used for a variety of investments, such as stocks, bonds, and mortgages,

The Fisher Effect The Fisher Effect is an economic theory developed by economist Irving Fisher in 1930. It states that there is a positive relationship between inflation and nominal interest rates, which means that if the expected inflation rate increases,

Overview of the Fisher Effect The Fisher Effect is an economic theory that states that the nominal interest rate is equal to the real interest rate (ex-ante) plus the expected inflation rate. This means that when the expected inflation rate

Answer: If All Else The Same, Credit Risk Increases We Would Expect Demand For Loanable Funds To Decrease When credit risk increases, the demand for loanable funds is likely to decrease due to higher perceived risk of default and the

Answer: Demand for Loanable Funds to Increase If the government’s budget deficit increases, and the government cannot print more money to finance the extra deficit, then the demand for loanable funds will increase. This is because the government will be

What is the Net Reproductive Rate of the Alaskan Wolverine Population? The net reproductive rate (Ro) of the Alaskan Wolverine population is 0.71. This is determined by taking the sum of all the age-specific survival and fertility rates in a

Answer: The Impact of Oil Price Increases on Loanable Funds Market The graph above presents a hypothetical loanable funds market in equilibrium. In this scenario, lenders and borrowers expect the inflation rate for the next year to be 2 percent

Answer: Gross National Expenditure The Gross National Expenditure (GNE) is the total expenditure by the national economy in a given year, and is calculated by adding together total consumption, investment, exports and government expenditure. In the given scenario, the GNE

Answer The Gross National Expenditure (GNE) in this economy would be 500. Calculation The GNE is calculated by adding together the sum of all the sources of expenditure: consumer spending, investment, exports, dividends, government spending, taxes, and social security contributions.

Answer True. In equilibrium, consumers will obtain 3,600 units of surplus. This is because when two companies compete by setting production levels (output) simultaneously, they will reach a Nash equilibrium (NE) where both of them are getting the most benefit

Answer: Equilibrium Surplus The statement “In equilibrium, consumers will obtain 3,600 units of surplus” is False. In a two-company market, the equilibrium is determined by the intersection of the Demand and Supply curves. The quantity supplied and demanded must be

Answer The statement is False. In equilibrium, the total surplus is the sum of the consumer and producer surplus. The consumer surplus is the area under the demand curve, above the equilibrium price, and the producer surplus is the area

Answer: Ralph’s Savings and Consumption in Period 2 Ralph’s utility function is c1c2, where c1 is his consumption in period 1 and c2 is his consumption in period 2. His income in period 1 is £70,000, and the interest rate

Ralph’s Consumption in Period 2 with an Increased Interest Rate If Ralph has a utility function 𝑐1𝑐2 , where 𝑐1 is his consumption in period 1 and 𝑐2 is his consumption in period 2, and he has an income of

Answer: Utility Function A utility function is a mathematical expression that is used to represent the level of satisfaction or utility that a consumer obtains from the consumption of certain goods and services. In this case, Ralph has a utility

Answer: Utility Function with Two Periods of Consumption Claire has a utility function 𝑐1𝑐2, where 𝑐1 is her consumption in period 1 and 𝑐2 is her consumption in period 2. She will have no income in period 2, and an

Answer: Utility Function A utility function is a mathematical formula used to measure the satisfaction a person gets from consuming a good or service. It is typically represented as a function of two variables, c1 and c2, where c1 is

Answer: Retirement Age Calculation To calculate the age that May will retire, her savings of $10,000 per year, compounded annually at 14% interest, must be taken into consideration. The current balance in the account is $5,000. To reach her goal

Answer: Equivalent Effective Interest Rate The equivalent effective interest rate is the rate that a bank charges for borrowing or gains by lending money. When comparing different interest rates, it is important to consider the frequency with which the interest

What is a Commercial Mortgage-backed Security? A Commercial Mortgage-backed Security (CMBS) is a type of security backed by a pool of commercial mortgages that are used to finance commercial real estate properties such as office buildings, shopping centers, apartments, and

What is Indifference Theory? Indifference theory is a concept used in economics which states that when presented with two or more options, a consumer will choose the option that offers them the greatest utility, or satisfaction. It is based on

Answer: Indifference Curve and Budget Line An indifference curve is a graph that shows the different combinations of two goods that will give the consumer the same level of satisfaction. A budget line is a graph that shows all the

Factors that can cause a Shift in the Market Demand Curve The market demand curve is an economic concept that describes how consumers will react to changes in price. Changes in the demand curve can be caused by a variety

What is Market Demand? Market demand is a measure of the total amount of goods and services that consumers are willing and able to purchase at a given price in a given period of time. It is derived from the

Understanding Market Demand in a Two-Consumer Economy Market demand in a two-consumer economy is derived by combining the demand of two individual consumers into one aggregate demand. This aggregate demand is determined by the sum of individual demands and is

Answer: Price Elasticity of Demand Price elasticity of demand (PED) measures the responsiveness of quantity demanded to a change in price. This calculation is useful to determine the effects of changes in price for a good or service, and can

Graph of the Supply Curve The graph of the supply curve is a line that represents the relationship between the price and quantity of a good or service. The supply curve is upward sloping, meaning that as price increases, quantity

Answer: Equilibrium Price and Quantity The equilibrium price and quantity in economics is the point at which the demand and supply curves intersect, which is known as the market equilibrium. To solve for the equilibrium market price and quantity, we

Answer: Classical or Conventional Theory and Social Cost Classical or conventional economic theory holds that there is social cost associated with an unchecked free market. This cost is due to the fact that in a market driven by profit, consumer

Answer: Compensating Variation (CV) and Equivalent Variation (EV) Compensating Variation (CV) and Equivalent Variation (EV) are two measures of consumer welfare used in economics. CV measures the maximum amount of money a consumer is willing to give up in order

Answer: Declining Balance Method for Calculating Book Value The declining balance method is a method of calculating the book value of an asset over time. This is done by subtracting the depreciation expense for each accounting period from the asset’s

Answer: Interest Rates in Asian Countries Lowering interest rates in several Asian countries is a move that can be implemented for a variety of reasons. Lowering interest rates can help stimulate economic growth, encourage borrowing, and help manage inflation. This

Summary Introducing yourself to an audience can be intimidating, but there are certain best practices that can make it a more successful and rewarding experience. It is important to be prepared, plan ahead, and practice your introduction. It is also

How to Introduce Yourself for a Presentation Presenting in front of an audience can be intimidating, but a great introduction can help you to put your audience at ease and make a good first impression. To introduce yourself effectively for

Answer: Interest Rates in Asian Countries and its Impact on US Economy Interest rates in several Asian countries have recently been lowered. The impact of such an event on the US economy will initially cause a boom, with higher inflation.

Answer: The Impact of Lower Interest Rates in Asian Countries on the US Economy When interest rates in several Asian countries are lowered, the US economy will initially experience a boom. This is due to the increase in capital flow