The crowding-out effect is such that additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.
<h3>What is the crowding-out effect?</h3>
The crowing-out effect refers to when the government borrows so much money that they make it hard for businesses to borrow and invest in new projects.
This happens because the government borrowing will decrease the amount of funds that can be borrowed in the market which will lead to higher interest rates for the remaining funds.
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Answer:
Total Dollar return on Investment = $85
Explanation:
Coupon rate = 7%
Coupon Payment ($1,000×7%) = $70
Selling Price of the bond ($1,000×102.5) = $1025
Today’s selling price of the bond ($1,000×104%) =$1,040
$1,040 - $1025 + $70 = $85
Total Dollar return on Investment = $85
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Answer:
1,996,800 minutes
Explanation:
Calculation for what is the practical capacity of resources supplied in minutes
Practical capacity of resources supplied =52 weeks × 2,400 minutes per week× 80% × 20 employees
Practical capacity of resources supplied= 1,996,800 minutes
Therefore the practical capacity of resources supplied in minutes is 1,996,800 minutes
Answer:
sets the price and determines the quantity it sells in the marketplace.
Explanation:
In a perfect competition, there are many buyers and sellers of homogeneous products, and there is free entry and exit in the market.
This simply means that, in a perfectly competitive market, there are many buyers and sellers (price takers) of homogeneous products (standardized products with substitute) and the market is free (practically open) to all individuals or business entities that are willing to trade all their goods and services.
Generally, a perfectly competitive market is characterized by the following features;
1. Perfect information.
2. No barriers, it is typically free.
3. Equilibrium price and quantity.
4. Many buyers and sellers.
5. Homogeneous products.
Examples of a perfectly competitive market are the Agricultural sector, e-commerce and the foreign exchange market.
In perfect competition, an individual firm sets the price and determines the quantity it sells in the marketplace.
