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Karolina [17]
3 years ago
11

An amortizing loan is one in which:the principal remains unchanged with each payment.accrued interest is paid regularly.the matu

rity of the loan is variable.the principal balance is reduced with each payment.
Business
1 answer:
Whitepunk [10]3 years ago
3 0

Answer:

The principal balance is reduced with each payment.

Explanation:

An amortizing loan is a loan with scheduled periodic payments that consists of both the principal plus the interest. The interest along with some part of principal is being paid in every payment. In beginning, interest component is higher but it gradually deceases as principal is being paid also which decreases the interest along with it.

Therefore, For Amortized loan, The principal amount is reduced per payment made.

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The equilibrium interest rate is 5 percent, the equilibrium quantity of loanable funds is increased to $250 billion and the government has a budget $100 billion.

Explanation:

The government enters the market when it has a surplus. The tendency of government budget is to rise the real interest rate and decrease investment. The private supply of the loanable funds will increase to match the quantity of loanable funds based on the government demand.

when the Government surplus is for $100 billion a year, the equilibrium interest rate falls to 5 percent and the equilibrium quantity of loanable funds increases to $250 billion a year.

Thus, The SLF curve is the supply of loanable funds curve and the PSLF curve is the private supply of loanable funds curve. The equilibrium interest rate is increased to 5 percent, the equilibrium quantity of loanable funds is $ 250 billion and the government has a budget of $100 bilion.

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