What are three reasons that banks charge interest on loans?
What will be an ideal response?
Banks charge interest on loans to compensate for inflation, to compensate for default risk, and to compensate for the opportunity cost of waiting to spend your money.
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In Figure 4-6 above, with IS0 shifting to IS1, movement from points 0 to 2 requires the real money supply to ________
A) rise by the same percentage as income B) fall by the same percentage as income C) remain constant D) none of the above
Are all categories of government expenditures included in gross domestic product? What government activities are not included in GDP?
What will be an ideal response?
Suppose the exchange rate changes so that more Japanese yen are required to buy a dollar. We could conclude that:
a. the Japanese yen has appreciated in value. b. U.S. citizens will buy more Japanese imports. c. Japanese will demand more U.S. exports. d. U.S. citizens will buy less Japanese imports.
Assume a certain competitive price-taker firm is producing Q = 1,000 units of output. At Q = 1,000 . the firm's marginal cost equals $15 and its average total cost equals $11 . The firm sells its output for $12 per unit. At Q = 999, the firm's total cost amounts to
a. $10,985. b. $10,990. c. $10,995. d. $10,999.