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Which of these may result in lower investment lower prices and slower economic activity?
when government borrowing increases interest rates
If interest rate increases will inflution increase or decrease?
If interest rate increases will inflution increase or decrease?"
How does compound interest affect the future value of an investment?
Increases
What happens to the real rate of interest when the demand for capital increases because technology innovations have caused the aggregate investment opportunity set to increase?
Anytime the demand for capital increases, interest rates go up. Supply and demand. The price of money is measured in interest rates.
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
What scenario may result in lower investment lower prices and slower economic activity?
When government borrowing increases interest rates.
Can anyone helps to explain the links between changes in the nations money supply the interest rate investment spending aggregate demand and real GDP and the price level?
An increase in the nation's money supply lowers interest rates, thus decreases the cost of doing business. With a higher return on investment, investment spending increases and so too does aggregate supply. As aggregate supply increases, aggregate demand increases and so prices go up. Thus real GDP and APL increase.
If expected inflation increases interest rates are likely to increase?
Yes, inflation and increases in interest rates usually go hand-in-hand, though inflation is not the sole cause of an increase in interest rates
Does the future value of an investment increases as the number of years of compounding at a positive rate of interest declines?
No, the future value of an investment does not increase as the number of years of compounding at a positive rate of interest declines. The future value is directly proportional to the number of compounding periods, so as the number of years of compounding decreases, the future value of the investment will also decrease.
Does the increase in the financial leverage multiplier result in an increase in the net profit margin and return on investment due to the increase in interest expense as debt increases?
An increase in the financial leverage multiplier typically results in higher interest expenses as debt increases, which can negatively impact net profit margin and return on investment (ROI). While leveraging can enhance returns when a company's earnings exceed the cost of debt, it can also amplify losses if profits decline. Therefore, the relationship is not straightforward; increased leverage can lead to higher returns only if the additional debt generates sufficient income to offset the rising interest expenses.
Does present value increase or decrease when the interest rate increases?
decrease
What best describes the economic effect that results when the government increase interest rates and restricts the lending of money?
Borrowing money becomes more expensive and there is less investment in production.
