Firme require capital to invest in productive opportunities. The best firms with the most profitable opportunities can attract capital away from inefficient firms with less profitable opportunities. Investors supply firms with capital at a cost called the interest rate. The interest rate that investors require is determined by several factors, including the availability of production opportunities, the time preference for current consumption, risk, and Suppose the Federal Reserve (the Fed) decides to tighten credit by contracting the money supply. Use the following graph by moving the black X to show what happens to the equilibrium level of borrowing and the new equilibrium interest rate. Eu brium INTEREST RATE (Percent CAPITAL Sons for tend to be more short or long-term interest rates? Which tend to be more volatile, short or long-term interest rates? Long-term interest rates Short-term interest rates If the inflation rate was 3.20% and the nominal interest rate was 4.20% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms, that is, if averaging is required, use the arithmetic average. Round intermediate calculations to four decimal places. 1.25% 0.85% 1.15% 1.00% Firms require capital to invest in productive opportunities. The best firms with the most profitable opportunities can attract capital away from inefficient forms with less profitable opportunities. Investors supply firms with capital at a cost called the interest rate. The interest rate that investors require is determined by several factors, including the availability of production opportunities, the time preference for current consumption, risk, and inflation. Suppose the Federal Reserve (the Fed) decides to tighten credit by contracting the money supply. Use the following graph by moving the black X to show what happens to the equilibrium level of borrowing and the new equilibrium interest rate. (Per INTEREST RATE CAPITAL Bons of dollars) Firme require capital to invest in productive opportunities. The best firms with the most profitable opportunities can attract capital away from inefficient firms with less profitable opportunities. Investors supply firms with capital at a cost called the interest rate. The interest rate that investors require is determined by several factors, including the availability of production opportunities, the time preference for current consumption, risk, and Suppose the Federal Reserve (the Fed) decides to tighten credit by contracting the money supply. Use the following graph by moving the black X to show what happens to the equilibrium level of borrowing and the new equilibrium interest rate. Eu brium INTEREST RATE (Percent CAPITAL Sons for tend to be more short or long-term interest rates? Which tend to be more volatile, short or long-term interest rates? Long-term interest rates Short-term interest rates If the inflation rate was 3.20% and the nominal interest rate was 4.20% over the last year, what was the real rate of interest over the last year? Disregard cross-product terms, that is, if averaging is required, use the arithmetic average. Round intermediate calculations to four decimal places. 1.25% 0.85% 1.15% 1.00% Firms require capital to invest in productive opportunities. The best firms with the most profitable opportunities can attract capital away from inefficient forms with less profitable opportunities. Investors supply firms with capital at a cost called the interest rate. The interest rate that investors require is determined by several factors, including the availability of production opportunities, the time preference for current consumption, risk, and inflation. Suppose the Federal Reserve (the Fed) decides to tighten credit by contracting the money supply. Use the following graph by moving the black X to show what happens to the equilibrium level of borrowing and the new equilibrium interest rate. (Per INTEREST RATE CAPITAL Bons of dollars)
