Why Does Investment Spending Depend On Interest Rates

Q: Why does investment spending depend on interest rates, among other factors? A: Investment spending depends on interest rates due to opportunity cost and risk. For example, when interest rates rise, the opportunity cost of your investment also increases. When interest rates are higher investors are willing to pay less for payment in the future. Which in turn leads to a lower rate of investment. The opposite can be said for falls in interest rates that are met will lower opportunity costs. Q: Why would most investments in the economy fail to take place if there were no financial institutions? A: Most investments in the economy would fail to take place if there were no financial institutions because many independent investors do not like to take large amounts of risk. By utilizing financial intermediaries, which are â€Å"organizations that receive funds from savers and channel them to investors,† people are given peace of mind in knowing that their source of money/investing is more stable and accounted for. Those who apply this principle also value the liquidity, or convertibility, that financial institutions provide in the case of emergency or cold feet. Q: Why do all societies have some form of money? A: All societies have some form of money because it makes economic transactions much more convenient and efficient. The purpose of money can be simplified into two main concepts including unit of account and store of value. Money serves as a unit of account which meansShow MoreRelatedWhy Does Investment Spending Depend On Interest Rates1078 Words   |  5 PagesQ: Why does investment spending depend on interest rates, among other factors? A: Investment spending depends on interest rates due to opportunity cost and risk. For example, when interest rates rise, the opportunity cost of your investment also increases. When interest rates are higher investors are willing to pay less for payment in the future. Which in turn leads to a lower rate of investment. The opposite can be said for falls in interest rates that are met will lower opportunity costs. Q:Read Moreeccc1266 Words   |  6 Pages(Outside Econ Department) Name: _________________________________ Student ID: _____________________________ Lecture: ________________________________ Multiple Choices    1. Which of the following would NOT be considered part of fixed investment spending (I)? A) Toyota buys a new robot for its automobile assembly line. B) Apple computer builds a new factory. C) Exxon increases its inventories of unsold gasoline. D) An accountant buys a newly built home for herself and her family. E) allRead MoreConsumption Function, Autonomous Consumption, And Marginal Propensity974 Words   |  4 Pagesrelationship between consumption spending and the level of income o C = Ca + by o Example: Income, wealth, interest rates, age, education, and family size are all part of spending, depending on your level of income. o The life-cycle theory assumes that household members choose their current expenditures optimally, taking account of their spending needs and future income over the remainder of their lifetime. †¢ Autonomous Consumption – The part of consumption that does not depend on income o Example: ElectricityRead MoreINTRODUCTION: Keynesian framework IS-LM Model According to Dornbusch (2011), the IS-LM model was1100 Words   |  5 Pagesfor investments and savings in the goods market while LM stands for liquidity preference and money supply in the money market. The model emphasizes the interaction between the goods and assets markets. Spending, interest rates and income are determined jointly by equilibrium in the goods and assets markets. The IS curve shows various combinations of interest rates and levels of income at which the goods markets clear while the LM curve shows that the demand for money depends on the interest rateRead MoreThe Economics of Money, Banking, and Financial Markets1072 Words   |  5 Pagesbetween interest rates on three-month Treasury bills, long-term treasury bonds, and Baa corporate bonds? The interest rate on three-month Treasury bills fluctuates more than the other interest rates and is lower on average. The interest rate on Baa corporate bonds is higher on average than the other interest rates. 2. What effect might a fall in stock prices have on business investment? The lower price for a firm’s shares means that it can raise a smaller amount of funds, and so investment in plantRead MoreThe Economics of Money, Banking, and Financial Markets1056 Words   |  5 Pagesbetween interest rates on three-month Treasury bills, long-term treasury bonds, and Baa corporate bonds? The interest rate on three-month Treasury bills fluctuates more than the other interest rates and is lower on average. The interest rate on Baa corporate bonds is higher on average than the other interest rates. 2. What effect might a fall in stock prices have on business investment? The lower price for a firm’s shares means that it can raise a smaller amount of funds, and so investment in plantRead MoreProject Paper Macroeconomics1161 Words   |  5 PagesWhen prices change, how do we measure real income? When prices change we measure real income with 3. What is unemployment? Why can’t it be driven down to zero? Unemployment is when you don’t have a job. Unemployed people are those who don’t have a job but are actively looking for work. Unemployment cannot be driven down to zero because the lower the unemployment rate is, the harder it will be for businesses to hire new employees. The harder it is to find qualified employees, the more competitiveRead MoreMonetary Policy And Fiscal Policy1178 Words   |  5 Pagesmaintain the market or stabilize the economy during a financial crisis. Monetary policy and fiscal policy are two tools by which government uses to guide the economy. Sometimes the economy is challenged with both inflation and unemployment at high rates. Macroeconomics breaks down the entire economy and the issues affecting it, including inflation, unemployment, economic growth, and monetary and fiscal policy. A country has to come up with good macroeconomic policies in order to better their economyRead MoreThe Study of Macroeconomics1507 Words   |  7 Pagesto the c hanged prices by changing the quantities they make, buy or sell. †¢ Why Macroeconomics Matters†¦ †¢ Cultural Literacy – â€Å"If you want to follow and participate in public debates and discussions, you need to know about macroeconomics.† – Self-interest – â€Å"the macro economy matters to you personally† †¢ Civic Responsibility – â€Å"working together, we can improve the macro economy.† †¢ Macroeconomic Questions †¢ Why do output and employment sometimes fall and how can unemployment be reducedRead MoreU.s. Government Budget Deficit And Debt1351 Words   |  6 Pagesnational and personal debt in the country. First, I am going to start with a definition of U.S government deficit: It is essentially the difference between what the U.S government spends in any fiscal year and the revenues it takes in. Any time the spending exceeds the revenues, the federal government runs a deficit. As many may already know the United States must increase its revenue or reduce expenses during the next decade in order to farther debt and loss of creditability in the world financial

A Brief Note On Mexico s Agriculture Sector - 1773 Words

Mexico’s agriculture sector is renown in the international community for a myriad of goods that it produces. From the cultivation of crops, sustainable soils, land usage and irrigation systems, its rich land has helped Mexico’s economy prosper into the 21st century. This feat is largely due to the country’s production and exportation of maize, one of their largest crops. However, in recent time Mexico’s agriculture sector has been affected by the vices of climate change and greenhouse emission gases amongst other natural phenomenons. For the purpose of this paper the change of climatic patterns in areas of temperature, precipitation and intensity will be discussed, as well as its correlation to climate change and current weather trends, which have created unsustainable environments for maize to grow. Historically, Mexico’s agriculture sector has followed a traditional style of crop production focused on small scale farming. According to Luc Dendooven of the Center for Research and Advanced Studies at the National Polytechnic Institute of Mexico, traditional agriculture refer to the â€Å"widely used cultivation techniques that consist of low N fertilizer application rates, no or little irrigation, removal of crop residue for animal feed or fuel, and little or no use of herbicides and pesticides† (237). The Mexican agricultural sector adapted this concept early on by utilizing basic natural resources such as soil enrichment and rainfall. Such practice has been supported by authorShow MoreRelatedNorth American Free Trade Agreement (Nafta)2362 Words   |  10 PagesNorth American Free Trade Agreement (NAFTA) I. Brief overview of NAFTA (mainly for in-class presentation) a. NAFTA Introduction b. Original Expectations II. NAFTA over the last 12 years a. Impact on the U.S. economy i. Jobs (Employment Growth) ii. Labor iii. Income iv. Imports vs. Exports (Trade Deficit) 1. Agriculture v. Economic growth b. Impact on Canadian economy c. Impact on Mexican economy d. Global Impact i. International Business ii. FDI (Foreign Direct Investment) Read MoreEconomic Environment in India9561 Words   |  39 PagesEconomy, India in World Economy. Economic Policies : Agriculture Policy, Industrial Policy, Commercial Policy Fiscal Policy. Economic Planning : Meaning, Importance, Objectives Techniques of Planning. II. III. Section – B I. Significance of Agriculture in Indian Economy and New Agriculture Strategy. Agriculture Finance (specially Kisan Credit Card), Nature of Risk and Uncertainty in Agriculture, Measures to Control Risk and Uncertainty, Agriculture W.T.O. Industrial growth in India and ProspectsRead MoreFeatures of the Indian Economy6094 Words   |  25 Pagesknow, implies the way in which something is organised or put together. Thus we should look into the way the Indian economy is organised. AmrdinglyY we will find out the major segments or sectors of the Indian economy and the manner in whichthese sectors interact with one another. In order to keep our discussion brief we will focus on the developments in the Indian economy dukg the post-independence period, particularly the period since five-year plans started in India. To begin with, we find out theRead MoreTrans-pacific partnership2487 Words   |  10 Pagesagreements as well with increased exports to new markets. Brief History The Trans-Pacific Strategic Economic Partnership Agreement is a free trade agreement with the goal of liberalizing the borders and economies of the Asia-Pacific Region and was initiated in 2005 by Chile, New Zealand, Singapore, and later Brunei. Eight more countries have joined in the negotiations since 2008: the United States, Australia, Vietnam, Peru, Malaysia, Mexico, Japan, and Canada. China has also expressed interest inRead MoreBrazil and Mexico Comparative Analysis Essay6071 Words   |  25 PagesTable of Contents INTRODUCTION 2 BRAZIL 2 Political Analysis 3 Cultural Analysis 4 Economic Analysis 7 MEXICO 9 Political Analysis 10 Cultural Analysis 11 Economic Analysis 14 COMPARATIVE ANALYSIS 17 Recommendation 18 BRAZILIAN STEEL INDUSTRY 18 IMPLEMENTATION 19 REFERENCES 21 APPENDIX 24 INTRODUCTION Brazil and Mexico are two emerging markets that are becoming increasingly prevalent and influential on the international stage. These nations share many similarities. Both are newlyRead MoreUK - Analysis Report31935 Words   |  128 Pagesplace. As the governance indicators illustrate, the UK is one of the most successful nations in terms of the application of rule of law, control of corruption, government effectiveness and regulatory quality. Furthermore, according to the World Bank s governance indicators for 2008, the country was given a high percentile rank of 94.3 on government effectiveness. The heavy involvement of the UK in the war on terror in Afghanistan and Iraq seems to have had some negative consequences. The threat ofRead MorePrimary Sector of Economy17717 Words   |  71 PagesPrimary sector of the economy The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry and fishing, mining, and extraction of oil and gas. This is contrasted with the secondary sector, producing manufactures and other processed goods, and the tertiary sector, producing services. The primary sector is usually most important in less developed countries, and typically less important in industrial countries. The manufacturingRead MoreNespresso Co. Analysis15084 Words   |  61 PagesVisual Art: in the 16th century, Protestantism had a strong influence on it in Switzerland. Some painters became very famous like Alberto Giacometti, Jean Tinguely and Paul Klee. Finally, the artistic Dada movement was created in Switzerland in the 1910’s. ii. Architecture Swiss people have a strong architectural tradition. We can found the Romanesque style of the 12th century in cathedrals (like in Basel, Sion, Chur, Geneva and Lausanne) and on castles or fortresses. There are also some cathedralsRead MoreEconomic Aspects of Agrarian Reform12715 Words   |  51 Pagesintroduction of commercial farming than than subsistence agriculture, 2. Free movement of agricultural goods within the country and to the extent possible across borders to enable farmers to specialize in such crops in which the land is most competitive internationally 3. Free market for retailing of agricultural goods, 4. Prescription of reasonable minimum wage in agriculture and its proper eforcement. 5. Removal of subsidies on inputs to agriculture by Govt. and direct subsidy to the poor for purchaseRead More Brazil Currency Devaluation Essay examples4817 Words   |  20 Pagestropical forest on the planet. Over 28 million m3/year come principally from Parà ¡, Mato Grosso and Rondà ´nia states. The majority of the wood stays in Brazil (86 percent), and 20 percent of that supplies the markets in Sà £o Paulo state (Brazil’s Forests in Brief). Among Brazil’s other gifts of nature are find mineral resources such as quartz, diamonds, chromium, iron ore, phosphates, petroleum, mica, graphite, titanium, copper, gold, oil, bauxite, zinc, tin, and mercury, manganese, nickel, platinum, uranium

Tractor Trailers free essay sample

February 2013 Learning something new can be a very scary experience. One of the hardest things I’ve ever had to do was to learn how to drive a tractor-trailer. Truck driving has been in my family for generations. Since I was a young child I always knew I wanted to be able to drive tractor-trailers. I spent a large portion of my childhood around big trucks and have always found driving such a large vehicle to be exciting. I decided that learning how to drive tractor-trailers was a valuable skill to learn and also to maybe carry on the family legacy of truck driver. The biggest reason I wanted to learn however, was simply because I thought it was fun and I enjoyed it. I never wanted it to be a full-time job, but it could be a skill that I could always have to fall back on. What I never realized is just how hard it was going to be to learn to drive and how much more there was to learn other than just driving. We will write a custom essay sample on Tractor Trailers or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page I remember watching my father and my uncle’s drive and they made it look so easy. I thought it would be like driving a car, but I was certainly wrong about that, I had no idea what I was about to get myself into. I was about to turn 18 years old and not only getting ready to graduate high school but also getting ready to learn how to drive tractor-trailers. There was so much more to learning how to drive tractor-trailers than I thought. I always knew that I had to get a commercial driver license, which is a special license to drive large vehicles, but I never realized how much information that was required to know. There are three separate parts to the commercial drivers license test. The written test, the pre and post inspection test, and of course the road test. The way it went was each section has to be completed prior to Martin2 moving on to the next. The written test was to be completed first. This was the easiest for part for me, it was very similar to a regular driving test. There is a driving manual with all the traffic laws and all the technical rules that come along with driving commercial vehicles. I was going for a Class A CDL, which is tractor-trailers. It was simple, I studied the manual for a couple weeks and I took the test and I not only passed, but I got a perfect score. It helped that there were quite a few multiple-choice questions. I remember being so excited that day because I had been the same day I received all my final grades for my last semester and knew that I was officially done with high school. However, thinking back on the situation I think I became overconfident from my success on the written test because what was to follow was certainly harder than I ever could have imagined. Secondly, came the pre and post inspection tests. These tests were hard for me because of all the parts of the tractor and trailer that had to inspected. I had some basic knowledge of tractor-trailers, but certainly not as much as I needed to know. I remember looking at the lists of areas and specific parts of the tractor-trailer that needed to be inspected and being very intimidated. Nonetheless, I knew from that start that it was going to be a challenge so for a couple of weeks every chance I got I would be studying my fathers tractor-trailer. I would get up early before my father went to work. I would come home early from school. I would sieze every opportunity had to study every single part on that list. One night I actually stayed up so late that I overslept the next morning and missed my graduation practice. Worst part about that was I got a detention for a non-excused absence. I didn’t mind though because it just gave me more time to study. It had been over two weeks of studying that truck and I felt that there was no more that I could do to prepare myself for the test. The next day after school my father and I drove the big rig up to Concord, NH to the Division of Martin 3 Motor Vehicles headquarters. The pre and post inpection and the road test must be done here. The written test can be taken at any local DMV branch. I was a nervous wreck, I just wanted to pass so bad. The test was very strict, not even one error was allowed so I had to be perfect. However, hard work always pays off and I was able to achieve another perfect score. I remember being so happy and relieved at the same time. I knew how hard I worked and the amount of time that I inevested in studying for this test. Now that I had two perfect scores with one more test to go, it was time to go back to work. Now it was time for the road test. For me, getting to this part was a reward for passing the previous two because I considered the actual driving to be the easiest part. Although not legally, I had already been driving since I was 14 years old. I would always go one trips with my father when I had school vacation or whenever I had any exteneded period of free time. He loved teaching me how to drive, I remember having so much fun going on these trips with him. When we would get on the inter-state highways he would let me drive. It allowed me to get a sense of how to control the truck. The better I got he would let me drive on more curvy roads and also at slower speeds so I could practice shifting through the gears. Down-shifting through the gears was the hardest part for me. There is a technique called â€Å"double clutching† that is used to downshift, and it is very hard to master. However, practice makes perfect, it only took a few days for me to master that technique. It was now time to make the trip to Concord to take the road test. I was not nearly as nervous this time because I was so confident in my driving that I knew I had no need to worry. My father and I pulled into the DMV and out came the instructor. He climbed into the truck, my father climbed out, and the test began. I passed the test with no errors and once again I got a perfect score. That meant I Martin 4 passed the entire CDL exam with a perfect score, an achievement not done very often. I remember the instructor telling me that and him saying that at age 18 I was already one of the better driver’s he had seen. It was now official, I was a certified Class A Commercial Truck Driver. It had been about a two month journey and it was now done. It was such special time in my life, not only did I just get a CDL, but I was a week away from graduating high school. The sense of accomplishment had never been higher to that point in my life. I was ready to enter the next chapter of my life. I remember growing up, and all the cliches I would hear about life such as,â€Å"Practice makes perfect†, â€Å"Hard work always pays off†, and â€Å"Never give up†. I never realized just how true these cliches really are. I worked so hard be able to aquire a CDL, there were times that I wanted to give up but I knew that I just had to keep going. I learned a lot about myself while going through that whole process. The determination and perseverance that I showed made me realize I can do anything if I really work for it. The life-lessons that I learned will carry on on for the rest of my life