This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain what effect an increase in the future expected interest rate will have on the IS curve and ... (Read 35 times)

mp14

  • Hero Member
  • *****
  • Posts: 534
on: Jun 30, 2018
Explain what effect an increase in the future expected interest rate will have on the IS curve and LM curve in the current period.
 
  What will be an ideal response?

Question 2

Securitization is a process of asset transformation that involves a number of different financial institutions working together. These financial institutions are known collectively as the
 
  A) transformers.
  B) amalgamation.
  C) movers and shakers.
  D) shadow banking system.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

gstein359

  • Sr. Member
  • ****
  • Posts: 293
Reply #1 on: Jun 30, 2018
Answer to Question 1

An increase in the future expected interest rate will cause a reduction in the present value of future disposable income and, therefore, human wealth. This causes current C to decrease and the IS curve to shift left. The increase in the future expected rate will also cause a reduction in the present value of future profits. This will cause a reduction in investment and another leftward shift in the IS curve. The LM curve will not be affected.

Answer to Question 2

D


mp14

  • Member
  • Posts: 534
Reply 2 on: Jun 30, 2018
Excellent

miss.ashley

  • Member
  • Posts: 371
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Pope Sylvester II tried to introduce Arabic numbers into Europe between the years 999 and 1003, but their use did not catch on for a few more centuries, and Roman numerals continued to be the primary number system.

Did you know?

More than one-third of adult Americans are obese. Diseases that kill the largest number of people annually, such as heart disease, cancer, diabetes, stroke, and hypertension, can be attributed to diet.

Did you know?

Blood in the urine can be a sign of a kidney stone, glomerulonephritis, or other kidney problems.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

More than 20 million Americans cite use of marijuana within the past 30 days, according to the National Survey on Drug Use and Health (NSDUH). More than 8 million admit to using it almost every day.

Effects of growth rate on development. Effects of growth rate on development.
Effect of pH on oxygen binding to hemoglobin Effect of pH on oxygen binding to hemoglobin
Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo Risks of infectious disease increase in (a) high-density agricultural populations compared to (b) lo
Marginal Supply - Demand Curve Marginal Supply - Demand Curve
Increase in Surface Area by Mechanical Weathering Increase in Surface Area by Mechanical Weathering
A 600-kg car is going around a curve with a radius of 120 m that is banked at an angle of 20° ... A 600-kg car is going around a curve with a radius of 120 m that is banked at an angle of 20° ...
Video: Types of disease resistance: innate defenses & immunity

For a complete list of videos, visit our video library