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Gary Crain
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When the government runs a continual budget deficit what does it increase?
interest rate
Explain Keynesian Economics and how did the US put this theory into effect?
During the 80's the massive tax cuts in the U.S lead to a rise in interest rate and have no effect on private savings as opposed to what the neo classical economics have predicted.
Who creates the caps on government borrowing?
In the USA it is Congress. They have to pass legislation to authorize the government to borrow more money (raise the debt ceiling). Indirectly the Federal Reserve and the market also put a cap on it since the ability to borrow depends on the interest rate that must be paid on any bonds issued by the government. Higher interest rates set by the Fed cause the interest rates that must be paid on government bonds to have to be higher to actually sell. The market also determines what interest rate will be required to sell all the bonds - the less demand there is for the bonds, the higher the interest rate has to be in order to make them attractive enough to sell and the better the yields on other potential investments, the higher the interest rates have to be in order to be sufficiently competitive. The higher the interest rates, the more difficult it is to get approval to borrow.
What is one way in which American society changed during the 1970s?
The nation's divorce rate increased significantly.
Federal government affect interest rates?
The federal government affects interest rates more than any other factor. They set the Fed Funds rate and the Prime rate. Fannie Mae, Freddie Mac, FHA. VA, and USDA loans are all backed or guaranteed by the federal government. Most of these loans are securitized into mortgage-backed bonds. Thus the coupon rates and performance of these bonds directly affect rates.
What is a mortgage arm?
ARM usually refers to an adjustable rate mortgage. The interest rate can go up during the life of the loan.ARM usually refers to an adjustable rate mortgage. The interest rate can go up during the life of the loan.ARM usually refers to an adjustable rate mortgage. The interest rate can go up during the life of the loan.ARM usually refers to an adjustable rate mortgage. The interest rate can go up during the life of the loan.
Can Financing expansionary fiscal policy by increasing the deficit does not generally affect interest rates or inflation?
Expansionary fiscal policy or running the printing presses usually causes inflation. Sometimes it causes hyperinflation. It caused both the inflation and interest rate to rise to 20% under the Carter administration.
What will happen to interest rate during inflation?
They will go up!
Where is the liber number located?
The Libor number, or London Interbank Offered Rate, is an interest rate benchmark that was discontinued in 2021. It was previously published by the ICE Benchmark Administration.
What is the term for a loan in which the interest rate does not change during the entire term of the loan?
a fixed rate loan.
What is the Interest Rate of Hard Money?
The rate varies from lender to lender. According to Bigger Pockets, The rate will range from 10% interest only to 18% interest only annual interest rate payable monthly in most cases. Some Lenders will defer interest payments to payoff, benefiting investors that do not want payments during rehab.
What is nominal interest?
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
What does the nominal interest rate mean?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
How does the real interest rate relate to the nominal interest rate?
A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.
What is the difference between fixed and adjustable interest rates?
Under a fixed rate, the rate does not change during the duration. An adjustable rate is one that can be changed. For instance, if I have 3% interest on something, it can be changed to, say, 3.4% under an adjustable rate.
What is the formula to calculate monthly interest rate if the annual interest rate is known?
Annual Interest Rate divided by 12= Monthly Interest Rate
What does nominal interest rates means?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
