Macroeconomics Answers

1. A company X has funded its operations by bank loans extensively. The interest rate on the loans is tied to the market interest rates and is adjusted every six months. Thus the cost of funds is sensitive to interest rate movements. Because of expectations that EU economy would strengthen during the next year, the company plans further growth through investments. The company expects that it will need substantial long-term financing to finance its growth and plans to borrow additional funds in the debt market.
a) What can be the company’s expectations about the change in interest rates in the future? Why?
b) How would these expectations affect the company’s cost of borrowing on its existing loans and on future debt?
c) How these expectations would affect the company’s decision when to borrow funds and whether to issue floating-rate or fixed rate debt?
2. Assume that the government makes a major sale of bonds to the private sector.

A politician has calculated that the total social benefit of the current amount of unemployment compensation is $3 billion per year. The total social cost of unemployment compensation is currently only $2 billion. The politician argues that a net gain to society would occur if we increased the level of unemployment compensation until total costs rise enough to equal total benefits. Is the politicians logic in the argument correct? Why or why not?

Give me 5 macroeconomics example questions.

1. What are the factors that influence level of investment
2.Why is the balanced budget multiplier equal to 1
3. What is meant by saving leakage
4. How is unemployment measured

How is the factor payments approach different from the expenditure approach to GDP?
A. the expenditure approach measures the total output of the economy, whereas the factor payments approach does not.
B. the factor payments approach measures the total output of the economy, whereas the expenditure approach does not
C. in the factor payments approach, income of each household is added up, as opposed to values of goods and services purchased by each type of final user.
D. in the factor payments approach, values of goods and services purchased by each type of final user are added up, as opposed to income of each household.

suppose you own a coffee shop in a small town. you buy coffee beans and milk from local farmers and earn a sizeable revenue from your business. Which of the following business payments are factor payments?

A. Payment to the coffee farmer
B. Profit from your business
C. Wages paid to waiters
D. Rent paid to your landlord

How do falling interest rates and falling prices influence total demand in the economy? Include the “wealth effect” in your answer

Should the federal government always balance its budget? Why or why not?

If inflation is less than expected, who benefits—debtors or creditors? Explain

If the Fed wants to increase the money supply through open-market operations, what does it do