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.
Investment Demand Schedule
Total income depends on total employment which depends on effective demand which in turn depends on consumption expenditure and investment expenditure. Consumption depends on income and propensity to consume. Investment depends upon the marginal efficiency of capital and the rate of interest. J. M. Keynes made it clear that the level of employment depends on aggregate demand and aggregate supply. The equilibrium level of income or output depends on the relationship between the aggregate demand curve and aggregate supply curve. As Keynes was interested in the immediate problems of the short run, he ignored the aggregate supply function and focused on aggregate demand. And he attributed unemployment to deficiency in aggregate demand.
a good indicator is the business cycle diagram and the difference between real GDP and trend rate( which the g'ment is targeting) if real is below trend it is a good indicator that the economy is in a recession. Because this is the case firms are less likely to be spending on capital goods aka. investment spending. They may decide to fix current capital goods.
the aggregate demand and aggregate supply curves.
There is a direct proportional relationship between aggregate expenditure and real GDP. Aggregate expenditure is actually equal to real GDP. This is different from the planned expenditure.
Investment Demand Schedule
Total income depends on total employment which depends on effective demand which in turn depends on consumption expenditure and investment expenditure. Consumption depends on income and propensity to consume. Investment depends upon the marginal efficiency of capital and the rate of interest. J. M. Keynes made it clear that the level of employment depends on aggregate demand and aggregate supply. The equilibrium level of income or output depends on the relationship between the aggregate demand curve and aggregate supply curve. As Keynes was interested in the immediate problems of the short run, he ignored the aggregate supply function and focused on aggregate demand. And he attributed unemployment to deficiency in aggregate demand.
The average interest rate for investment property loans is between 5 and 8 percent. The interest rate depends on the time it takes until everything is payed back.
the IS curve represents the combination of interest rates and outputs that put the goods market in equilibrium
a good indicator is the business cycle diagram and the difference between real GDP and trend rate( which the g'ment is targeting) if real is below trend it is a good indicator that the economy is in a recession. Because this is the case firms are less likely to be spending on capital goods aka. investment spending. They may decide to fix current capital goods.
In the monetarist model, a difference between desired spending and income is caused by either an excess demand for money (MD > MS) or an excess supply of money (MS > MD). An excess demand for money reduces desired spending, and an excess supply increases it. In the Keynesian model, changes in desired spending (particularly in desired investment spending) cause the difference.
Yes, at the end of the year you take the difference between the interest revenue gained and what would have been gained if the investment had the present value interest. For a discount, the difference will be credited against the discount received.
the aggregate demand and aggregate supply curves.
return on capital = earnings before interest and tax / capital employed * 100
There is a direct proportional relationship between aggregate expenditure and real GDP. Aggregate expenditure is actually equal to real GDP. This is different from the planned expenditure.
APR simply reflects the annual interest rate that is paid on an investment, but doesnÕt take into effect how interest is applied. APY takes into account how often the interest is applied to the balance, which can vary daily to annually.
Classical Aggregate Supply function is vertical whereas the Keynesian Aggregate Supply function is positively sloped.