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- The supply of bonds comes from Select one: O A. Savers OB. Borrowers OC. Financial Intermediaries O D. HouseholdsRecently, the economies of China and India have begun to grow very rapidly. This increases their citizens’ income and wealth. In turn, these citizens increase their savings in their country and also in the United States. a. When foreign savings enter the U.s. loanable funds market, which curve is affected—supply or demand? How is this curve affected? b. How would you graph the U.s. loanable funds market both before and after the increase in foreign savings? c. How does the change in foreign savings affect both investment and future output in the United states?assume that the economy is operating in a recessionary. explain all the steps which the bank of canada should take in order to fix this problem. 2 graph is needed along with the explanation.
- What is the sequence of events from a rise in the federal funds rate target range to a change in the inflation rate? Other short-term interest rates _______. A. and the long-term interest rate rise the same day B. rise the same day, but it takes a few months for the supply of loanable funds to decrease C. rise within a few weeks, but the long-run interest rate rises almost immediately D. rise the same day, but it takes a few months for the supply of loanable funds to increase13. When the government uses its overdraft facilities at the central bank, it ___________ the quantity of moneyin the economy. This is called ___________________ financing. A Increases; deflationaryB Decreases; inflationaryC Decreases; deflationaryD Increases; inflationaryWhich of the following reduces the interest rate? a. a decrease in government expenditures and a decrease in the money supply b. an increase in government expenditures and an increase in the money supply c. an increase in government expenditures and a decrease in the money supply d. a decrease in government expenditures and an increase in the money supply
- What is liquidity trap? Explain briefly and show on graph.When the Central Bank ________ interest rates, bond prices ________. Select one: a. raises; remain the same b. lowers; remain the same c. raises; rise d. lowers; riseWhich of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest rate
- Read the following article, which introduces the concept of Treasury bills and the relationship between their yield and price. Then answer the question that follows. HOW DO T-BILL YIELDS GO NEGATIVE? BY THE APLIA ECONOMICS CONTENT TEAM The week of September 15, 2008, was ripe with volatility in U.S. financial markets. Events unfolding in the wake of the mortgage crisis made investors extremely fearful. One result of this fear was a "flight to quality" as investors sought to avoid risk by moving their funds into the safest asset classes. U.S. Treasury securities (or "Treasuries," as they're commonly known) are one such asset class, considered to have virtually no risk. An article from the Associated Press (Madlen Read, "Treasures Dip on RTC Speculation, but Anxiety High," September 18, 2008) discusses some of the factors that led investors to bid up the prices of 3-month United States Treasury bills (T-bills) to such an extent that their yields fell to a shockingly low level. Before…Suppose the bank expects interest rates to rise which would impact the value of theirgovernment bonds. Suppose the price of the 10 year Treasury bonds is expected tochange by 6%. Would this cause a problem for the bank? Why or why not?What does the interest rate effect say? a. Interest rates causes inflation to go down b. Interest rates causes aggregate demand to have an upward slope c. as prices go up, interest rates will control inflation and prevent it from increasing d. when prices for outputs rise, the same purchases will take more money or credit to accomplish