User Account

All Pages

Equilibrium interest rates

Assignment Help Business Management
Reference no: EM131465996

Equilibrium Interest Rates. Suppose that GDP is Y = $5, 000. You may assume zero government spending, borrowing, or taxes, and 0 exports or imports.

(a) Suppose that households save 30% of trend output. Compute aggregate consumption and aggregate savings.

(b) What is the level of investment I? Explain

(c) Suppose that investment demand is given by the schedule you computed in question 1(c). Illustrate this using a figure and compute the equilibrium interest rate.

(d) Now suppose that (as in1(e)above) firms become more optimistic about the future and raise the estimates of factory yield by $3. Illustrae this in a figure, and compute what happens to equilibrium investment and interest rates.

(e) Suppose that expectations return to normal, but that households decide to start saving less. They decrease their savings from 30% to 25% of trend income. What happens to investment and interest rates?

Reference no: EM131465996

Questions Cloud

Important criteria in a choice between the systems : From the perspective of an international business, what are the most important criteria in a choice between the systems?
How much dry clay need to mixed to produce one ton of clay : A special mud formed by mixing dry clay and water is used to assist drilling through rock. The optimum amount of day in the mud is determined from a chart.
How many units will the firm produce : The firm recently invested $10,000 in new machinery. Each unit produced cost $10 and the market price is $20.
Use of information technology : Explain the ethical issues in the use of information technology.
Equilibrium interest rates : Suppose that GDP is Y = $5, 000. You may assume zero government spending, borrowing, or taxes, and 0 exports or imports.
How much of the acid is now available : Dilute sulfuric acid (19% acid, the rest water) is required for activating car batteries. A tank of weak acid (12.5% concentrate, the rest water) is available.
Family and social service program : How will you determine if the goals and objectives you established have been met? What practices and methods will you use to evaluate the goals and objectives?
The investment schedule : Suppose there is a firm that is considering whether to build a new factory. The factory will cost $100 to construct today, and will yield revenue of $110 a year
Change the amount of spinach and sodas : Will Popeye be able to afford the lifestyle he is accustomed too (i.e., his usual consumption pattern)? Will Popeye change the amount of spinach and sodas h

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd