Robust economy growth ships the transactions demand for money. Consequently, growth will tend to either raise our interest rate or decrease those rates. Please see which direction the rates move, and explain why

The following graphs depict the market for loanable funds and the relationship between the real interest rate and the level of net capital outflow (NCO) measured in terms of the Mexican currency, the peso.   Complete the first row of the table to reflect the state of the markets in Mexico.   Real Interest Rate Net Capital Outflow (NCO) (Percent) (Billions of pesos) Initial state     After capital flight       Now, suppose that Mexico experiences a sudden bout of political turmoil, which causes world financial markets to become uneasy. Because people now view Mexico as unstable, they decide to pull some of their assets out of Mexico and put them into more stable economies. This unexpected shock to the demand for assets in Mexico is known as capital flight.     Summarize the results of capital flight by completing the following table.   Real Interest Rate Real Exchange Rate Net Capital Outflow Effects of capital flight…

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The following graphs depict the market for loanable funds and the relationship between the real interest rate and the level of net capital outflow (NCO) measured in terms of the Mexican currency, the peso.

Explain/Discuss Three ways that a reduced rate of interest influences real capital investment.

The following graph shows the market for loanable funds. For each of the glven scenarios, adjust the appropriate curve on the graph to help you complete the questions that follow. Treat each scenario separately by resetting the graph to its original state before examining the effect of each. individual scenarlo. (Note: You will not be graded on any changes you make to the graph.) Demand Supply Supply Demand LOANABLE FUNDS (Billions of dollars) INTEREST RATE (Percent)

What should we infer when our models make predictions that are not reflected in the world? Obviously there is a level of inaccuracy in every model, but is it better to presume we misunderstand the world or to use such errors to find problems preventing the world from matching our model? Explain your answer.   Robert Lucas argues that the main model of efficient investment is remarkably inaccurate. What is the key critique of Lucas and how was this problem addressed in our model?   Many developing countries struggle with debt due to high interest rates and often low returns. Given what you learned in this chapter, why does this challenge exist? What might be a policy to alleviate it?

Explain three types of capital receipts in an given economy?

Suppose the United States moved from the current pay-as-you-go Social Security system to a fully funded one and financed the transition without additional government borrowing. How would the shift to a fully funded system affect the level and the rate of growth of output per worker in the long run? This will the saving rate. In the long run, it will lead to a level of output per worker and the growth rate of output per worker. A. increase; higher; have no effect on B. decrease; higher; have no effect on C. increase; higher; increase ○ D. decrease; lower; decrease

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would shift:   a. the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right.   b. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right.   c. both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left.   d. the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left.