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Naya [18.7K]
3 years ago
14

As the price level rises, the cost of borrowing money will , causing the quantity of output demanded to . This phenomenon is kno

wn as the effect. Additionally, as the price level rises, the impact on the domestic interest rate will cause the real value of the dollar to in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore , and the number of foreign products purchased by domestic consumers and fir
Business
1 answer:
Triss [41]3 years ago
3 0

Answer:

Increase; decrease; interest rate effect; increase; decline; rise.

Explanation:

As the price level increases, the purchasing power of money declines. People will need more money to make transactions. As a result, the demand for money increases.  

This increase in demand for money will cause the interest rate to increase. This implies that the cost of borrowing is rising. They will cause a decrease in investment and thus output level.  

This phenomenon of fall in output level because of the rise in the cost of borrowing as a result of inflation is called the interest-rate effect.  

The higher interest rate will attract capital from abroad. This inflow of capital will cause the demand for the domestic currency to increase. As a result, the value of the domestic currency in the foreign exchange market will increase.  

This appreciation in the value of the domestic currency will make exports expensive and imports cheaper. This will cause the export demand to fall and imports to increase. Consequently, net exports will decrease.

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Grecian Tile Manufacturing of Athens, Georgia, borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per annum on a
shtirl [24]

Answer: 92812.50

Explanation:

The following information can be derived from the question:

Loan principal = $1,500,000

LIBOR for 1st 6 months = 4.50%

LIBOR for last 6 months = 5.375%

Lending margin per annum = 1.25%

The interest will then be:

= 1,500,000 × [(4.50% + 1.25%)/2] + 1,500,000 × [(5.375% + 1.25%)/2]

= 1,500,000 × [(0.045 + 0.0125)/2] + 1,500,000 × [(0.05375 + 0.0125)/2]

= 92,812.50

Therefore, the interest is 92812.50.

8 0
2 years ago
maximum amount willing to payGenesis Scents has two divisions: the Cologne Division and the Bottle Division. The Bottle Division
Bezzdna [24]

Answer: $2.60

Explanation:

Based on the information given in the question, the maximum amount that the Cologne Division would be willing to pay for each bottle transferred would be the amount that the company can purchase the containers in the external market which is given in the question as $2.60.

That's the highest amount that they can but the containers for. Therefore, the answer is $2.60

8 0
2 years ago
2 Points
Serhud [2]

Answer:

The minimum wage

Explanation:

5 0
3 years ago
Suppose that in the U.S. consumer market, the demand for credit cards is increasing. As the demand for credit cards increases, w
Anna [14]

Answer:

Both equilibrium quantity and interest rate will shift to the right.

Explanation:

A shift to the right on those two factors candidates a general increase in the market.

As a demand for a certain product increase, The producer will match it up by increasing the supply of that product in order to accommodate as many consumers as possible. This will cause the equilibrium between demand and supply increased.

As the consumers base grow, there will be more competitors show up to offer the credits for the customers. This will make the potential income that credit providers decreased. As a response, it is very common for them to raise the interest rates for the credit.

8 0
3 years ago
The hernandez family budgets $420 a month for food. last month they spent $413, which creates a?
MAVERICK [17]

A budget surplus of $7

<h3>What is a budget surplus's opposite?</h3>

A budget deficit is the polar opposite of a budget surplus. If a company (or government) has a budget deficit, it signifies that over the given timeframe, it spent more money than it brought in. A business's budget deficit could necessitate a budget reform for the upcoming fiscal year, even though a budget deficit for the government is not always negative for spending.

<h3>What does the term "surplus" mean?</h3>

A surplus is a sign that the government is being run efficiently. When government income is higher than government expenditures for a specific time period, typically a fiscal year, there is a surplus, which is a positive number.

<h3>How is inflation caused by a budget surplus?</h3>

Nevertheless, inflationary pressures can also exist when the economy is struggling. In essence, a rise in the money supply is what causes inflation. In light of the foregoing, a budget surplus will drain funds from the economy, hence lowering the money supply and fostering a deflationary environment.

Learn more about budget surplus:

brainly.com/question/26010226

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6 0
1 year ago
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