Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The charts below depict lending and borrowing for the U.S. economy in late 2030: 6 5 un 4 3 3 2 2. 1 0 0
The charts below depict lending and borrowing for the U.S. economy in late 2030: 6 5 un 4 3 3 2 2. 1 0 0 0 200 400 600 800 1000 0 200 400 600 800 1000 1. The two quadrants above depict the U.S. Ioanable funds markets in late 2030. Label the and identify, on the graph, the equilibrium real corporate borrowing rate and the equilibrium quantity of lending to U.S. corporations. Likewise, identify the equilibrium quantity of borrowing by the U.S. government, and the equilibrium interest rate that households receive. What is the spread between the two equilibrium borrowing rates? The Federal government, in late 2030, enacts a very large green energy spending program. The U.S. government, in 2031, needs to borrow 100% more than they did in 2030. In 2030 inflation, inflation is expected to rise by 1.5% per year. In 2031, inflation rises and inflation expectations rise to 2.5%. e) Suppose, however, that the government spending on green energy also generates great enthusism in the business world, as it lifts demand for many products. Suppose these enthusiastic business leaders recalculate their investment opportunities, nw that they see stornger growth for their products. Draw the necessary additional curve shift, so that your chart depicts both effects. f) Suppose you looked on a Bloomberg screen in 2030, and again in 2031. What would the interest rate be that the government paid, to borrow money from households in 2030? What would the interest rate be in 2031? The charts below depict lending and borrowing for the U.S. economy in late 2030: 6 5 un 4 3 3 2 2. 1 0 0 0 200 400 600 800 1000 0 200 400 600 800 1000 1. The two quadrants above depict the U.S. Ioanable funds markets in late 2030. Label the and identify, on the graph, the equilibrium real corporate borrowing rate and the equilibrium quantity of lending to U.S. corporations. Likewise, identify the equilibrium quantity of borrowing by the U.S. government, and the equilibrium interest rate that households receive. What is the spread between the two equilibrium borrowing rates? The Federal government, in late 2030, enacts a very large green energy spending program. The U.S. government, in 2031, needs to borrow 100% more than they did in 2030. In 2030 inflation, inflation is expected to rise by 1.5% per year. In 2031, inflation rises and inflation expectations rise to 2.5%. e) Suppose, however, that the government spending on green energy also generates great enthusism in the business world, as it lifts demand for many products. Suppose these enthusiastic business leaders recalculate their investment opportunities, nw that they see stornger growth for their products. Draw the necessary additional curve shift, so that your chart depicts both effects. f) Suppose you looked on a Bloomberg screen in 2030, and again in 2031. What would the interest rate be that the government paid, to borrow money from households in 2030? What would the interest rate be in 2031
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started