What are two affiliates of the World Bank? What do they do?
What will be an ideal response?
The two affiliates are the International Finance Corporation (IFC) and the International Development Assistance Association (IDA). Both organizations handle work that the World Bank may not do or not do well. The IFC specializes in investing in private businesses in DVC. The IDA makes “soft loans” to the poorest DVC with easier terms for DVC than does the World Bank.
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Corporations can attract more lenders by offering a lower coupon on their bonds as compared to the government bonds
a. True b. False Indicate whether the statement is true or false
Gold is a major reserve asset that is currently used in most official reserve transactions.
Answer the following statement true (T) or false (F)
An economy has full-employment output of 5000. Government purchases are 1000. Desired consumption and desired investment are given by Cd = 3000 - 2000r + 0.10Y Id = 1000 - 4000rwhere Y is output and r is the expected real interest rate. (a)Find the real interest rate that clears the goods market. Assume that output equals full-employment output.(b)Calculate the amount of saving, investment, and consumption in equilibrium.(c)If a shock to wealth causes desired consumption to decline by 200 (so that the new equation for desired consumption is Cd = 2800 - 2000r + 0.10Y), find the equilibrium real interest rate, saving, investment, and consumption.
What will be an ideal response?
Answer the following statements true (T) or false (F)
1. If the expected rates of return on investments increase, the loanable funds theory predicts that the equilibrium interest rate would decrease. 2. An increase in the expected rates of return on investments would most likely increase the supply of loanable funds. 3. Other things equal, short-term loans usually have lower rates of interest than do long-term loans. 4. For a given future value, the higher is the interest rate, the higher will be the present value. 5. In time-value of money calculations, discounting is the reverse of compounding.