Chapter 16 or 29 Interest, Rent, and Profit: Pre-Class & In-Class Activities Packet Name/I.D. Number: Section: Date: Part 3 Discussion Questions and Problems 1. What does having a positive rate of time preference have to do with positive interest rates? 2. How would the interest rate change as a result of the following? a. A rise in the demand for consumption loans b. A decline in the supply of loanable funds C. Arise in the demand for investment loans 3. The interest rate on loan X is higher than the interest rate on loan Y. What might explain the difference in interest rates between the two loans? 4. The real interest rate can remain unchanged as the nominal interest rate rises. Do you agree or disagree with this statement? Explain . 5. What type of person is most willing to pay high interest rates? 6. What does it mean to say that land rent is price determined, not price determining? 7. What is the link between profit and uncertainty? 8. What is the overall economic function of profits? 9. The more economic rent a person receives in his job, the less likely he is to leave the job & the more content he will be on the job. Do you agree or disagree? Explain your answer. 10. Describe the effect of each of the following events on individuals' rate of time preference and thus on interest rates: a. A technological advance that increases longevity b. An increased threat of war c. Growing older