If time has value, why are financial institutions often willing to extend you a 30-year mortgage at a lower annual interest rate than they would charge for a one-year loan?
Answer to relevant QuestionsIf 2 percent growth is your break-even point for an investment project, under which outlook for the economy would you be more inclined to go ahead with the investment: (1) A forecast for economic growth that ranges from 0 to ...Suppose financial institutions didn’t exist but you urgently needed a loan. Where would you most likely get this loan? Using Core Principles, identify an advantage and a disadvantage this arrangement might have over ...Explain how money encourages specialization, and how specialization improves everyone’s standard of living.Assuming no interest is paid on checking accounts, what would you expect to see happen to the relative growth rates of M1 and M2 if interest rates rose significantly?Whichusually grows faster: M1 or M2? Produce a graph showing M2 divided by M1. When this ratio rises, M2 outpaces M1, and vice versa. What is the long-run pattern? Is the pattern stable?
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