0
Want this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
If Ted wants to buy a house and believes that interest rates will rise he should?
If Ted wants to buy a house and believes that interest rates will rise, he should apply for a fixed rate mortgage.
How can government budget deficit cause the level of interest rates to rise for an economy?
When price increases, interest rate tends to rise. Government budget deficit suggests high Government spending (G) which leads to the rightward shift of AD and hence the corresponding upward pressure on price. Interest rate is determined by the money demand and money supply, government budget deficit suggests that government is unable to tap into reserves to finance spending. They will have to borrow. This increases the demand for money and thus causing the interest rate to rise.
What is the opportunity cost to a fully employed economy of increasing capital investment?
A fall in consumption
How does a rise in US interest rates affect the pounds exchange rate?
Increasing the interest rate generally lowers inflation so the price level change of the U.S. dollar would be less. This means that the exchange rate (USD/GBP) would increase more slowly and less overall than without the interest rate increase.
How might a rise in local currency affect a country's interest rates?
It may also encourage a decrease in the interest rates in the country if the central bank of that country wants to maintain the currency exchange rate and a decrease in the interest rate would spur local investment.
What is interest rate rise?
An interest rate rise is when a person is late on a bill such as a credit card or insurance bill and the interest rate the person pays goes up.
Would it be advantageous to borrow money if you expected prices to rise?
If you expect prices to rise when borrowing money it depends on if the interest rate is smaller than the rate of inflation. If the interest rate is smaller than it could be advantageous.
Why should you get the lowest interest rate?
That is simply not true. It might be better to get a higher interest rate which is fixed for the term of the loan if you expect interest rates to rise.
If Ted wants to buy a house and believes that interest rates will rise he should?
If Ted wants to buy a house and believes that interest rates will rise, he should apply for a fixed rate mortgage.
Why is a bond with a higher interest rate often considered a higher risk investment?
Bonds with a higher interest rate are often considered a higher risk investment because when interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond's maturity, the greater its interest rate risk.
What is the difference between interest rate risk and reinvestment rate risk?
Reinvestment risk When interest rates are declining, investors have to reinvest their interest income and any return of principal, whether scheduled or unscheduled, at lower prevailing rates.Interest rate risk When interest rates rise, bond prices fall; conversely, when rates decline, bond prices rise. The longer the time to a bond's maturity, the greater its interest rate risk.
What is the definition of fixed interest rates?
An interest rate that remains constant throughout the agreed term. If changes in the goverment base rate occur where commercial rates rise or fall you wont be affected.
How can government budget deficit cause the level of interest rates to rise for an economy?
When price increases, interest rate tends to rise. Government budget deficit suggests high Government spending (G) which leads to the rightward shift of AD and hence the corresponding upward pressure on price. Interest rate is determined by the money demand and money supply, government budget deficit suggests that government is unable to tap into reserves to finance spending. They will have to borrow. This increases the demand for money and thus causing the interest rate to rise.
What is the opportunity cost to a fully employed economy of increasing capital investment?
A fall in consumption
What is the difference between fixed rate and adjustable rate mortgage?
A fixed rate mortgage has its interest rate fixed (ie. stays the same) over the life of the loan. An adjustable rate mortgage (also called variable rate mortgage in Australia) has an interest rate that can be changed at any time by the lender. For example, if central bank interest rates go up then a variable rate loan will usually go up too. If the interest rate is fixed, then the lender can't change the rate even if their funding costs rise.
How does a rise in US interest rates affect the pounds exchange rate?
Increasing the interest rate generally lowers inflation so the price level change of the U.S. dollar would be less. This means that the exchange rate (USD/GBP) would increase more slowly and less overall than without the interest rate increase.
How might a rise in local currency affect a country's interest rates?
It may also encourage a decrease in the interest rates in the country if the central bank of that country wants to maintain the currency exchange rate and a decrease in the interest rate would spur local investment.
