What would determine whether a student would choose to be

Assignment Help Macroeconomics
Reference no: EM13319198

Three students have each saved $1000. Each has an investment opportunity in which he or she can invest up to $2000. The rates of return on the students' investment projects are: Harry: 5% Ron: 8% Hermione: 20%.

a) If borrowing and lending is prohibited, so each student uses only his or her own saving to finance his or her own project, how much will each student have a year later when the projects pay their returns?

b) Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r. What would determine whether a student would choose to be a lender or a borrower in this market?

c) Among those three students, what would be the quantity of loanable funds supplied and quantity demanded at an interest rate of 7%? At 10%?

d) At what interest rate would the loanable funds market among the three students be in equilibrium? At this interest rate, which students would borrow and which would lend? e) At the equilibrium interest rate, how much does each student have a year later after the loans have been repaid and the projects pay their returns? Compare your answers to part

a). Who benefits from the market? Is anyone worse off?

Reference no: EM13319198

Questions Cloud

Consider a perfectly competitive market with an upward : Consider a perfectly competitive market with an upward sloping market supply curve. Explain the effects of a decrease in supply for the equilibrium price and quantity as well as the total amount of spending. How does the answer depend on the nature o..
Determine the vertical force p exerted by the tower on pin a : a transmission tower is held my three guy wires attached to a pin at A and anchored by bolts b c and d if the tension in wire ab is 3.6 kn determine the vertical force p exerted by the tower on the pin at A
State rank the oxidation number for nitrogen : Rank the following nitrogen compounds in order of decreasing oxidation number for nitrogen. Rank from highest to lowest oxidation states. N2,NO2,NO2-,NH3,NO^-3,NO
Determine the power needed for the heater : A cattle watering has a free surface with a size equal to 0.6 m x 0.3m, with the longer side being parallel to the prevailing wind. Wind at -23 C is blowing over the surface at 1 m/s.
What would determine whether a student would choose to be : Now suppose their school opens up a market for loanable funds in which students can borrow and lend among themselves at an interest rate r. What would determine whether a student would choose to be a lender or a borrower in this market?
Explain the vmax and the km of an enzyme : When the Vmax and the Km of an enzyme are not known, it is essential to determine the enzyme's initial velocity (Vo) at different [S]. To determine the initial velocity, one would have to: Select one: a. Use the Michaelis Menten equation
What volume of the blue block : The red block in the %u201CSame Volume%u201D floats in water. what volume of the blue block would float above the water line if the blue block was placed on top of the red block in the water
An economy is faced by exhaustion of an important natural : An economy is faced by exhaustion of an important natural resource at a time when it is introducing improved technology.explain how these events will effect the economy production possibility curve.
What is the maximum distance away for the navigation lights : An offshore drilling rig is being towed out to sea. What is the maximum distance away that the navigation lights can still be seen by an observer standing at the shoreline

Reviews

Write a Review

Macroeconomics Questions & Answers

  Utilizing fully explained indifference curve analysis

Utilizing fully explained indifference curve analysis, derive a demand curve for a product.

  The bureau of economic analysis has been hit by the flu

The Bureau of Economic Analysis has been hit by the flu; consequently, it has been slow in getting out data on economic performance. A recession is developing, but nobody knows it yet. This delay is an example of

  Explain how do changes in interest rates inflation

Explain how do changes in interest rates, inflation, productivity and income affect exchange rates.

  Which can only be objectively measured by an accountant

The highest valued alternative sacrificed as a result of a choice is: Answer the opportunity cost, which can be objectively measured by anyone. the opportunity cost, which can only be subjectively measured by the individual who chooses.

  Explain when is equilibrium achieved in the foreign exchange

Explain when is equilibrium achieved in the foreign exchange market. Why is foreign exchange hedging beneficial to an organization.

  What pick would a level one reasoner make

Consider the "Beauty Contest" or guessing game experiment. Everybody picks an integer between 0 and 100 inclusive, and the winner is the person who picks closest to 2/3 of the average pick. a) What picks are ruled out by the idea of one level of it..

  Compute the unregulated market level of output

compute the unregulated market level of output and price as well as the socially efficient level. By how much does the market output exceed the socially efficient output, and by how much is the market price below the socially efficient price

  What are the main benefits nd cost that should be enumerated

assume that you have been asked estimate the benefits associated with starting an ecotourism project where visitors will be given guided tours of a particularly rich habitat area. 1- what are the main benefits and cost that should be enumerated

  Determine profit-maximizing amount of electricity to produce

The second largest public utility in the nation is the sole provider of electricity in 32 counties of southern Florida. To meet the monthly demand for electricity in these counties, which is given by the inverse demand function P = 1000 - 5Q.

  The occurrence of the law of supply

The Law of Supply movement along the curve due to the price effect occurs because people can buy only so much of a product.

  What type of foreign investments would be best for economy

The PPF curve shows the economic choices a country can make about production given scarce resources, a given technology, and a given quantity of inputs. Assume you are a developing country, producing food and clothing at maximum capacity.

  Explain the finding that people in high-income economies

Explain the finding that people in high-income economies seem happier than people in low-income economies, but, over time, people in high-income economies do not seem to be any happier even if their country grows richer.

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!

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