What is the loanable funds market?
What will be an ideal response?
The loanable funds market is the market in which households, firms, governments, banks, and other financial institutions borrow and lend. It is the aggregate of all the individual financial markets and includes loan markets, bond markets, and stock markets. The real interest rate is determined in this market.
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Why are international investors who have invested in developing nations favoring foreign direct investment and portfolio investment over loans?
A) The process of making loans is usually more difficult for investors to do than foreign direct and portfolio investment. B) The interest rate charged on the loans is usually lower than what can be earned in the U.S. C) It is illegal for banks to make loans to foreign firms. D) Investors have an aversion to owning dead capital and want to make sure that the resources they own do not become dead capital.
If the demand for beans tends to decline as incomes rise, everything else held constant, beans are _____
a. luxury goods b. normal goods c. price sensitive d. not price sensitive e. inferior goods
Dividing the index of import prices by the index of export prices and multiplying by 100 generates a country's terms of trade
Indicate whether the statement is true or false
If we consider the relationship between the opportunity cost of holding money and velocity that existed in the 1980s, if the Fed followed the same policymaking in the 1990s and 2000s, would they have achieved the desired results? Explain.
What will be an ideal response?