Answer:
Interest rates would rise.
Explanation:
There would be a decrease in the amount of loanable funds borrowed.
if the government were to increase the tax on interest income, a reduction in the amount of funds borrowed would happen because the cost of borrowing would then become higher and people would have to pay more than they would have paid for every amount borrowed
Answer:
The pound's forward discount or premium is 3.74%
Explanation:
The current spot rate is 1 Pound = $2
The interest rate parity exists, then:
The forward rate:
1 Pound*1.07 = $2*1.11
1.07 Pound = $2.22
1 pound = $2.0748
The Premium in Pound = $2.0748 - $2
= $0.0748
Premium rate = $0.0748/$2*100
= 3.74%
Therefore, The pound's forward discount or premium is 3.74%
Answer and Explanation:
The computation is shown below:
The formula is
= Amount ÷ (1 + interest rate)^number of years
a) Rate = 11%
Value of $140 in 1 year = $140 ÷ (1 + 11%) = $126.13
Value of $240 in 5 years = $240 ÷ (1 + 11%)^5 = $142.43
Value of $350 in 10 years = $350 ÷ (1 + 11%)^10 = $123.26
Now Ranking
Opotion 2 > Option 3 > Option 1
b) Rate = 1%
Value of $140 in 1 year = $140 ÷ (1 + 1%) = $138.61
Value of $240 in 5 years = $240 ÷ (1 + 1%)^5 = $228.35
Value of $350 in 10 years = $350 ÷ (1 + 1%)^10 = $316.85
Now Ranking
Option 3 > Option 2 > Option 1
c) Rate = 20%
Value of $140 in 1 year = $140 ÷ (1 + 20%) = $116.67
Value of $240 in 5 years = $240 ÷ (1 + 20%)^5 = $96.45
Value of $350 in 10 years = $350 ÷ (1 + 20%)^10 = $56.53
Now Ranking
Option 1 > Option 2 > Option 3
In a recession, government spending increases.
<h3>What happens to government spending in a recession?</h3>
A recession is when the gross domestic product of a country for four consecutive quarters is negative. When there is a recession, the government would want to increase money supply.
In order to increase money supply using fiscal tools, the government can either reduce taxes or increase government spending.
To learn more about fiscal policies, please check: brainly.com/question/25716528
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