10. Suppose a bond pays a 4 percent annual coupon, has a $1,000 face value, wo y
ID: 1121455 • Letter: 1
Question
10. Suppose a bond pays a 4 percent annual coupon, has a $1,000 face value, wo years to maturitys discount rate. Ceteris paribus, it follows that the present value (or market price) of the b bond today should be: A. $1060 B. $1000 (1,000 1.0) (00g To answer Questions #11412 refer to the following diagram, which shows the loanable funds market. 11. Starting from the initial equilibrium point, if the government provides additional tax incentives for saving, then, ceteris paribus, it follows that the equilibrium interest rate willwhi investment will decrease; increase B. increase; decrease C. decrease; decrease D. increase; increase 12. Starting from the initial equilibrium point, if the government now reduces the additional tax incentives for saving, as discussed in the problem above, then, ceteris paribus, it follows that the equilibrium interest rate will while investment will- decrease; increase decrease decrease; decrease D. increase; increase 13. Ceteris paribus, which of the scenarios below will lead to a decrease in real GDP? A. Prices decrease, and the production of goods and services increases. The production of goods and services increases, and prices increase. The production of goods and services decreases. Prices increase.Explanation / Answer
10 . d,
PV = (1+.04)2*1000/(1+.06)2 = 963.34
11. d,
With more savings sops savings will increase , due to increase in savings rate will fall and investment will increase.
12. b
With less incentive savings will fall , interest rate will increase and investment will fall .
13. C
GDP is value of goods and services produced in economy.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.