How does the elasticity of supply of loanable funds

Reference no: EM133205006

Assignment:

Q.1. Critical Thinking: Financial System: Saving and Investment:

Suppose the government borrows $20 billion more next year than this year.

a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall?

b. What happens to investment, private saving, public saving, and national saving? Compare the size of the changes to the $20 billion of extra government borrowing.

c. How does the elasticity of supply of loanable funds affect the size of these changes?

d. How does the elasticity of demand for loanable funds affect the size of these changes?

e. Suppose households believe that greater government borrowing today implies higher taxes to pay off the government debt in the future. What does this belief do to private saving and the supply of loanable funds today? Does it increase or decrease the affects you discussed in parts (a) and (b)?

Important Note: - Support your submission with course material concepts, principles, and theories from the textbook and at least two scholarly, peer-reviewed journal articles.

Q.2. Critical Thinking: Financial System: The Basic Tools of Finance:

When company executives buy and sell stock based on private information they obtain as part of their jobs, they are engaged in insider trading.

a. Give an example of inside information that might be useful for buying or selling stock.

b. Those who trade stocks based on inside information usually earn very high rates of return. Does this fact violate the efficient markets hypothesis?

c. Insider trading is illegal. Why do you suppose that is?

Reference no: EM133205006

Questions Cloud

What is the firm cost of ordinary equity : a. Assume the market value of Maxy Corp's ordinary equity, preferred equity and debt are $7 billion, 54 billion and $10 billion respectively. The firm has a bet

Compute the bond market value today : 1. A company plans on taking out real estate loan of $10 Million on its distribution center. The company will make even payments at the end of each year over te

Why is ratio analysis so important in health care : Why is ratio analysis so important in health care? Explain why you selected those three ratios and how the three ratios would be used to update the CEO.

What needs might a user have that your app would serve : What needs might a user have that your app would serve? Why might a user decide engaging with your app is the right choice for them?

How does the elasticity of supply of loanable funds : How does the elasticity of supply of loanable funds affect the size of these changes? Harvard Business School.

Create a balance sheet and income statement : MHA 5001 - Health Care Financial Management Assignment - Balance Sheet Worksheet, Columbia Southern University - Create a balance sheet and income statement

Define the price elasticity of demand : Define the price elasticity of demand and explain its role to predict changes in quantity and total revenue. Saudi electronic university. econ 101.

Describe the apps screens and features : Describe the app's screens and features. List the major UI components on each screen. Identify where data is included in the app.

Most diversified portfolio : A) Which bank has the most diversified portfolio? Show all calculations. [Hint: Use the formula presented in the course.]

User Account

All Pages