Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 18, Problem 2DQ
To determine
Different perspectives of land rent.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please use the graph to answer the questions.
Given the market conditions, what will the prevailing
interest rate be?
O 6%
18%
O 2%
10%
Given the market conditions, how much money is
borrowed in the loanable funds market?
O $10 billion.
$50 billion
O$90 billion
O $70 billion
$30 billion.
Interest rate (%)
18-
16-
14-
12.
10.
8-
6-
+
et
0
Demand
Supply
60 70 80 90
10 20 30 40 50
Quantity of loanable funds (in billions of dollars)
Manipulate the graph to show what will happen to supply and
demand in the market for loanable funds when the
government budget deficit increases, changing the
equilibrium quantity of loanable funds by 3
percentage points.
Ceteris paribus, what is the new interest rate?
interest rate:
Ceteris paribus, private investment would
increase.
not change.
decrease.
%
20
10
9
Supply
8
Interest rate (%)
7
CO
5
LO
3
2
1
0
0
2
Demand
4 6 8 10 12 14 16 18 20 22 24 26 28
Quantity of loanable funds (% of GDP)
come is included
13. LAST WORD Assume that you borrow $5,000, and you pay
back the $5,000 plus $250 in interest at the end of the year.
Assuming no inflation, what is the real interest rate? What
would the interest rate be if the $250 of interest had been dis-
counted at the time the loan was made? What would the inter-
est rate be if you were required to repay the loan in 12 equal
monthly installments?
Chapter 18 Solutions
Economics (Irwin Economics)
Knowledge Booster
Similar questions
- D Question 26 A corporation issues a bond with a par value of $4,800 in one year. Assume that the bond is sold today for $4,500. What is the interest rate received by the lender? O 3.33% O 11.11% O 6.67% 6.25% D Question 27 The U6 unemployment rate includes which individuals that are not included in the U3 unemployment rate? O government employees O people who volunteer O self-employed individuals O people who are working part-time but want full-time work O members of the population that are under the age of 16arrow_forwardExplain why economic rent is a surplus payment when viewed by the economy as a whole but a cost of production from the standpoint of individual firms and industries. Explain: “Land rent performs no ‘incentive function’ for the overall economy.”arrow_forwardRefer to the information provided in the table at right to answer the question that follows. The value for personal income in billions of dollars is O A. 890. OB. 870, O c. 960. OD. 950. Depreciation Receipts of factor income from rest of world Government purchases Imports Payments of factor income to rest of world Net private domestic investment Personal income taxes Personal consumption expenditures Dividends Exports Amount of national income not going to households $Billions 40 30 100 50 50 200 120 600 20 60 20arrow_forward
- Interest rate (%) Supply Demand Quantity of financial capital (% of GDP) Suppose that the graph above represents the market for financial capital in Yemen. How does an increase in the budget deficit of Yemen affect its equilibrium interest rate? O A. The equilibrium interest rate decreases since the demand curve for financial capital shifts to the left. O B. The equilibrium interest rate increases since the demand curve for financial capital shifts to the right. O C. The equilibrium interest rate increases since the supply curve for financial capital shifts to the left. O D. The equilibrium interest rate decreases since the supply curve for financial capital shifts to the right.arrow_forwardSuppose that the demand for loanable funds for car loans in the Milwaukee area is $12 million per month at an interest rate of 1O percent per year, $13 million at an interest rate of 9 percent per year, $14 million at an interest rate of 8 percent per year, and so on. If the supply of loanable funds is fixed at $18 million, what will be the equilibrium interest rate? Instructions: Enter your answer as a whole number. percent per yeararrow_forward4. Suppose that the table below shows an economy's relationship between real output and the inputs needed to produce that output: LO4 Input Quantity Real GDP 150.0 $400, 112.5 300 75.0 200 a. What is productivity in this economy? b. What is the per-unit cost of production if the price of each input unit is $2? c. Assume that the input price increases from $2 to $3 with no accompanying change in productivity. What is the new per-unit cost of production? In what direction would the $1 increase in input price push the economy's aggregate supply curve? What effect would this shift of aggregate supply have on the price level and the level of real output? d. Suppose that the increase in input price does not occur but, instead, that productivity increases by 100 percent. What would be the new per-unit cost of production? What effect would this change in per-unit production cost have on the economy's aggregate supply curve? What effect would this shift of aggregate supply have on the price…arrow_forward
- The Atlantic Investment Tax Credit is a 10% tax credit available to businesses that make specific investments in the Atlantic region and the Gaspe Peninsula. The graph shows the market for loanable funds. Show the impact of this tax credit by moving the proper curve appropriately in the graph. The new equilibrium interest rate is The quantity of loanable funds is $ 1 Incorrect 5 Incorrect I billion Which statement accurately describes the impact of the Atlantic Investment Tax Credit? % Firms find that more investments are profitable and increase their demand for loanable funds. As a result, the interest rate rises. Interest rate (%) 10 10 3 2 0 0 5 10 15 20 25 30 35 Quantity of loanable funds (in billions) 40 Supply 45 Demand 50arrow_forwardAn individual buys $11,000 of stock. The stock grows by 6 percent each year. Calculate the final value after taxes if the individual holds the stock for 2 years. Assume that only half of realized capital gains is taxable and that the tax rate is 40 percent. The individual sells the stock at the end of the 2 years. What is the final value of the stock after taxes, rounded to the nearest dollar? O $12,088 O $11,400 O $9,888 O $1,816 O $1,680arrow_forwardTable 25-1 The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 11 bushels of apples and 5 bushels of almond. Year Year 1 Year 2 Price of Apples (Dollars per bushel) 14 9 90.01. O 79.42. O 91.62 O 110.40 Price of Almond (Dollars per bushel). 5 13 Refer to Table 25-1. If Year I is the base year, then the CPI for Year 2 wasarrow_forward
- 5. LO 2,5 A consumer receives income y in the current period and income y' in the future period, and pays taxes of t and t' in the current and future periods, respectively. The consumer can borrow and lend at the real interest rate r. This consumer faces a constraint on how much he or she can borrow, much like the credit limit typically placed on a credit card account. That is, the consumer cannot borrow more than x, where x < we-y+t, with we denoting lifetime wealth. Use diagrams to determine the effects on the consumer's current consumption, future consumption, and saving of a change in x, and explain your results.arrow_forwardA company that manufactures car brakes invested $350 exactly 5 years ago in some bonds. If the bonds are now worth $500, what rate of return per year did the company make on the basis of simple interest? Select one: O a. 17 O b. 3 С. 9 O d. 14 е. бarrow_forwardO 2 5 real interest rate Refer to the figure above. If the economy starts at point 0, how would you illustrate the effect of a positive technological shock that increases returns to investment in high-tech industries, by moving to point: 3 S2 S3 S1 3 2 * 5 D1 D2 Loanable fundsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
