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2 years ago

According to liquidity preference theory, money supply and money demand are balanced by adjustments of

Business

1 answer:

givi [52]2 years ago

5 0

Answer:

Nominal Interest rate

Explanation:

According to liquidity preference theory, money supply and money demand are balanced by adjustments of Nominal Interest rate. Suppose you have some money, you will decide to either keep it in cash or in the bank. If you keep the money in cash, the opportunity cost of keeping in cash is the interest rate earned if you would have kept the money in the bank. Bank offers the nominal interest rates and not the real interest rates. Bank rates are not adjusted for inflation. So if the interest rate on money increases the opportunity cost of holding money in cash increases. If money supply in the economy increases the demand for money will increase only by reducing the interest rate because then only people fir hold cash and demand higher money. So, money supply and money demand are balanced by adjustments of the Nominal Interest rate.

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Kelly wants to save money for an emergency fund. She decides to take advantage of the high interest rates of the holiday club he

klasskru [66]

I don't think that is a wise decision

Holiday club are designed to the one who wanted to spent big bucks on specific holidays (for example : Christmas) since the value will fall after the holidays
It's not really suitable for someone who wanted to put it aside for emergencies, hope this helps

6 0

3 years ago

Suppose the market price increase. Which statement is correct?

vladimir2022 [97]

Answer:

Explanation:

If the market price of a good increases, quantity demanded decreases and quantity supplied increases. This is in line with the law of demand and supply respectively.

according to the law of supply, the higher the price, the higher the quantity supplied and the lower the price, the lower the quantity supplied.

According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

3 0

3 years ago

A small craft store located in a kiosk expects to generate annual cash flows of $6,800 for the next three years. At the end of t

Dafna11 [192]

Answer:

The monetary value is $24,201.23

Explanation:

Giving the following information:

Cash flows:

Year 1= $6,800

Year 2= 6,800

Year 3= 6,800

Year 4= $15,000.

The discount rate is 15 percent.

We need to discount each cash flow to the present value:

PV= FV/(1+i)^n

Year 1= 6,800/1.15= 5,913.04

Year 2= 6,800/1.15^2= 5,141.78

Year 3= 6,800/1.15^3= 4,471.11

Year 4= 15,000/ 1.15^4= 8,576.30

Total= $24,201.23

6 0

3 years ago

Finding the required interest rate: Your parents will retire in 18 years. They currently have $250,000, and they think they will

Salsk061 [2.6K]

Answer:

i= 8% annual compunded

Explanation:

Giving the following information:

Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1,000,000 at retirement.

We need to calculate the interest rate required to reach the $1 million goal in 18 years without any additional deposit.

FV= PV*(1+i)^n

Isolating i:

i= [(FV/PV)^(1/n)] - 1

i= [(1,00,000/250,000)^(1/18)] - 1= 0.08

i= 8% annual compunded

7 0

3 years ago

Frank noticed that Anna missed making their monthly sales quotas at a large auto dealer. He thinks this happened because she lac

masha68 [24]

Answer: Fundamental attributional error.

Explanation:

Frank is making a fundamental attributional error when judging the cause of Anna's inability to meet sales target. Frank is blaming her failure based on her character rather than on the real reason which is the attractive sales offer of their competitors. Fundamental attributional error is an error which arises from judging a person's action based on their character without considering other possible external causes.

8 0

3 years ago