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If interest rate increases will inflution increase or decrease?
If interest rate increases will inflution increase or decrease?"
Potentential effect of an increase in mortgage interest rate?
Increase in principal + interest payment.
If the Federal Reserve sells a Treasury bond to a bank what will be the effect on the interest rate the bank charges its customers for a loan?
The interest rate will increase since there are fewer available
When GOI will increase Small Saving interest rate?
NEVER
What does the effect of rate of interest on bonds?
it will increase the price of bonds
What is the percentage increase if the interest rate rises from 5 percent to 9 percent?
4%increase
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
Does an increase of 4 percent in the interest rate result in a 4 percent increase in the total interest paid?
Not usually. A "4 percent increase in the interest rate" usually means that there is some reference interest rate of x percent that is increased to 4 + x percent. This means that the interest paid increases from x percent of the principal to 4 + x percent of the principal. Therefore, the interest paid increases by 100 (4/x) %. For example, if a recent Federal funds rate of 1 % in the United States were to be increased by 4 %, the interest paid on any given amount of principal would increase by 400 %!
Why interest rate spread is leading indicator?
To understand why the interest rate spread is a leading indicator, one must interpret the interest rate as the price of money. A high interest rate means that obtaining money is costly. If interest rate spreads are great, this means investors are anticipating an increase in the price of money. The price of money will increase due to an increase in the quantity of money demanded (and an increase in demand). Investors see the economy recovering, and in the process of this recovery, they see an increase in demand for money (loans etc.) to buy new capital and purchase other nondurables. Therefore the price of money increases and thus the spread increases.
What will be the result of an increase in the real interest rate?
ahmm....the result is in your book!
Does present value increase or decrease when the interest rate increases?
decrease
What are the factors affecting the multiplier?
Savings.taxes nd increase in interest rate
