Q: Define the concept of rate of return on investment?
A: Rate of return on investment measures the net gain or loss of an investment over a period of time.…
Q: A tax law change that successfully encourages saving will interest rates, which leads to investment…
A: Equilibrium in the loanable funds market occurs at the intersection of demand and supply curves of…
Q: What is Paid-in capital?
A: In exchange for stock, the shareholder gives a full amount of cash or asset to the company is known…
Q: What does the net investment test indicate?
A: Net investment is the net amount of money a business spends on capital assets, minus the…
Q: Define and explain the internal rate of return on a new investment?
A: Internal rate of return or IRR is a measure in economics of capital budgeting parlance and…
Q: Some studies have found that saving is not very sensitive to the rate of return on saving. a.true…
A: Saving is a part of money income that is saved. Saving = disposable income - consumption
Q: Explain the term capital in depth
A: Companies employ capital to fund the continuous production of goods and services in order to…
Q: factors that contribute to the successful investment
A: Investment means Balancing risks, between reward and opportunity cost - knowing the right balance…
Q: Which of the following situations represents investment? Saving? Explain Your family takes out a…
A: The situation that represents investment or savings are as follows :
Q: If the business community becomes more optimisticabout the profitability of capital, the…
A: Behavioral optimism refers to the positive attitude of gaining positive outcome from the investment…
Q: "Capital is a flow and income is a stock" True/False
A: # If a quantity is being measured at a perticular point of time then it is stock and if a quantity…
Q: Which of the following represents stock variables? (a) Wealth, saving and unemployment; (b) Gold…
A: The stock variables are those variables which measure at a specific point of time. For example, the…
Q: what is relationship between saving , capital formation and consuption ?
A: Capital formation is given by the amount of investment. In a closed economy without Government…
Q: Which type of investment is called a mixed investment?
A: Investment refers to the purchase of an asset that entails greater payoff in the form of increased…
Q: What are the different types of investmen
A: Investment is the new expenditure on physical assets such as machines, buildings, tools and…
Q: According to the life-cycle income hypothesis, if the retirement age increases but life expectancy…
A: The life-cycle hypothesis is an economic concept how people spend and save money throughout the…
Q: What is the Net-investment test?
A: Net- investment measures the company's assets and investment like property, software, plants and…
Q: Discuss the overall purpose people have for investing. Define investment
A: Investment: Investment is the commitment of funds for some specific period of time, in return will…
Q: Consider the loanable funds model we analyzed in class. If there is an expected increase in future…
A: The loanable assets model is a model that uses organic market to delineate how a financing still up…
Q: Explain the difference between "capital", "human capital", and "financial capital"?
A: Entrepreneur is responsible for the movement of enterprise. Entrepreneur is geographically as well…
Q: Describe the Investment Decision for a Simple Investment?
A: A simple investment can be made on the basis of various methods like the payback period, return on…
Q: How is the rate-of-return easier to understand?
A: In a specific period of time, the net gain or loss experience from an investment is known as the…
Q: Differentiate the Direct Investment versus Indirect Investments.
A: The economies tend to work upon the basis of the activities which are done by various entities.…
Q: Discuss why you would expect the saving-borrowing pattern to differ by occupation (for example, for…
A: "Savings refers to the process of setting aside some part of income for future use." Individuals may…
Q: Distinguish between saving and investment.
A: An important debate in macroeconomics relates to the relationship between saving and investment.…
Q: It has been said that a society with high savings rate is a society with a high standard of living.…
A: (Q) It has been said that a society with a high savings rate is a society with a high standard of…
Q: Define the term the concept of return on investment?
A: Return on investment measures the performance which is used to evaluate the efficiency of an…
Q: Explain/Discuss Three ways that a reduced rate of interest influences real capital investment.
A: Real capital investment is the sum of money which is given to a company to achieve it business…
Q: The importance of income in determining savings has persisted since the time of Keynes. Why have…
A: Keynes: It refers to the economic theory under which economy's total spending and its effect are…
Q: an increase in the expected real interest rate tends to raise desired saving, but lower desired…
A: The change in the expected real interest rate affects the level of saving and investment in the…
Q: Explain the role of interest rates in allocating capital, modulating R&D spending, and helping…
A: An interest rate is the percentage of principal being charged by the lender for use of its money.…
Q: Describe the simple investment?
A: Investment refers to buying financial assets like shares and bonds to earn interest rates. Rate of…
Q: What group of people benefits from a higher interest rate? Explain how they benefit
A: Interest is the opportunity cost of holding money.
Q: interest rates, which leads to v investment and economic growth. A tax law change that successfully…
A: Increase or decrease in taxes come under the fiscal instruments available with the government.…
Q: Explain Three ways that a reduced rate of interest influences real capital investment.
A: Answer - Need to find- Explain Three ways that a reduced rate of interest influences real capital…
Q: What is the relationship; remember how economist talk about relationships, between the level of…
A: Economics is the study of various economic relationships. Relationship means it shows the connection…
Q: Describe the process of Calculating Present Value?
A: PV formula Present value = Future value/ (1+r)n r= rate of return n = number of periods
Using the concepts of real interest rate and expected
Step by step
Solved in 2 steps
- Graph Interest Rate Figure 2 Saving Incentives Increase the Supply of Loanable Funds A change in the tax laws to encourage Americans to save more would shift the supply of loanable funds to the right from S₁ to S₂. As a result, the equilibrium interest rate would fall, and the lower interest rate would stimulate investment. Here the equilibrium interest rate falls from 5 percent to 4 percent, and the equilibrium quantity of loanable funds saved and invested rises from $1,200 billion to $1, 600 billion. 5% 4% 2.... which reduces the equilibrium interest rate... See graph built step by step 0 $1,200 Supply, S₁ $1,600 3.... and raises the equilibrium quantity of loanable funds. 5₂ 1. Tax incentives for saving increase the supply of loanable funds... Demand Build graph yourself Loanable Funds (in billions of dollars)China currently (2016) has a household saving rate of about 36 %. It has never been below 27 % in the last 30 years. What role do you think this high saving rate has for China’s economic success?what is relationship between saving , capital formation and consuption ?
