Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 15, Problem 4E
To determine
To evaluate the knowledge that should be used by the lender to offset the liability for loan extension.
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Question 8 The market for loanable funds in country 1 is described by the equations I = 18 - 6r and S = 8+4r; in country 2, it is I = 18 - 4r and S = 8 + 2r. a) Find the relationships between net capital outflow and the world interest rate (rw) in the two countries. b) What is the nature of these relationships? (Are they both positive, both negative, or one positive and the other negative?) c) Calculate the world equilibrium interest rate. d) How can you reconcile the result from part b with the one from part c?
Suppose that US mutual funds suddenly decide to invest more in Canada
What happens to Canadian net captial outflow, Canadian saving and Canadian domestic investment?
E1
Countries that have good financial intermediaries: have savings that are used less effectively. channel fewer savings into funding for investments in capital. have smaller loan markets. make more good investments..
Chapter 15 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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