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Why does the LM curve have a positive slope?
The LM curve has a positive slope because as interest rates increase, the quantity of money demanded decreases. This is because higher interest rates make borrowing more expensive, leading to a decrease in investment and consumption, which in turn reduces the demand for money.
If interest rate increases will inflution increase or decrease?
If interest rate increases will inflution increase or decrease?"
What is an increase in the investment demand curve?
The interest rate is the thing that primarily affects the investment demand curve and an increase in investment indicates a decrease in real interest rate. This makes sense because it is better for borrowers to pay a lower interest rate. Also, better technology can cause the investment demand curve to shift out, also high inventories. If interest rates are expected to be higher in the future, firms will choose to invest now and the lowering of business taxes will result in the investment demand curve to shift outwards.
Does present value increase or decrease when the interest rate increases?
decrease
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
Why does the LM curve have a positive slope?
The LM curve has a positive slope because as interest rates increase, the quantity of money demanded decreases. This is because higher interest rates make borrowing more expensive, leading to a decrease in investment and consumption, which in turn reduces the demand for money.
If interest rate increases will inflution increase or decrease?
If interest rate increases will inflution increase or decrease?"
What is an increase in the investment demand curve?
The interest rate is the thing that primarily affects the investment demand curve and an increase in investment indicates a decrease in real interest rate. This makes sense because it is better for borrowers to pay a lower interest rate. Also, better technology can cause the investment demand curve to shift out, also high inventories. If interest rates are expected to be higher in the future, firms will choose to invest now and the lowering of business taxes will result in the investment demand curve to shift outwards.
Does present value increase or decrease when the interest rate increases?
decrease
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.
What is the relationship between demand for money and interest rates?
as interest rates increase, demand for money increases.
What tends to result in an increase in the selling price of houses in an area?
An increase in mortgage interest tates.
What is the opportunity cost to a fully employed economy of increasing capital investment?
A fall in consumption
What happens to money demand when there is an increase in interest rates?
money demand will decrease
What causes a decrease in cash flow?
Many things can cause a decrease in cash flow including decrease in sales, increase in expenses, not collecting accounts receivables timely, and increase in interest rates.
Does an increase in interest payable increase or decrease cash flow?
Increase in interest payable increases the cash flow of company as payment is not cleared when due and which causes temporary increase in company's cash flow
What is Keynesian Transmission Mechanism?
The Keynesian transmission mechanism is the process whereby changes in the monetary sector (increase or decrease in the interest rate i) have an impact in the real sector, by increasing or decreasing Investment (I), otherwise known as Capital Formation. There is an inverse or negative relationship between the two - this means that as the interest rate i increases, the capital formation or investment in the economy I decreases.
