Question

If more Canadians adopted a “live for today” approach to life, how would this affect saving, investment, and the interest rate?

What is the role of the financial system? Name and describe two markets that are part of the financial system in our economy. Name and describe two financial intermediaries.

Answer #1

Qa. **If more canadians adopted a "live for
today"**approach to life then they would spend more and save
less . there would be less saving and investement and a higher
interest rate. This would also shift the supply curve to the left
in market for lonable funds.

Qb. **The role of financial system** is to help match
one person's saving with another person's investement.

**Two markets that are part of financial system
*** The bond market , through which large corportations, the
federal government .

* Local governments borrow , and the stock markets , through which corporations sell ownership shares.

*Banks , which take in deposits and use the deposits to make loans.

* Mutual funds , which sell shares to the public and use the proceeds to buy a portfolio of finanacial assets.

Explain how change in the interest rate and inflation might affect
saving and investment decision in the economy?

Javier hopes to live 50 more years from today and plans to
retire in 30 years (from today). During his retirement he would
like to receive, at the end of each month, a
constant retirement income. Javier’s savings plan during his
working life is as follows:
Starting today, Javier will make monthly contributions at the
beginning of each month, which will grow at 0.15%
effective monthly. The first contribution Javier will make to the
savings fund is for an amount...

You are saving for retirement. To live comfortably, you decide
you will need to save $2,000,000 by the time you are 65. Today is
your 30th birthday and you decide, starting today and continuing on
every birthday up to and including your 64th birthday, that you
will put the same amount into a savings account. If the interest
rate is 5%, how much must you set aside each year to make sure you
will have $2,000,000 in the account on...

You are saving for retirement. To live comfortably, you decide
you will need to save $3,000,000 by the time you are age 65. Today
is your 27th birthday, and you decide, starting today and
continuing on every birthday up to and including your 65th
birthday, that you will put the same amount into a savings
account. If the interest rate is 10 %, you set aside $ 7473 each
year to make sure that you will have $3,000,000 in the...

a. How much would you have to deposit today if
you wanted to have $42,000 in three years? Annual interest rate is
10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided. Round your answer
to the nearest whole dollar.)
b. Assume that you are saving up for a trip around
the world when you graduate in two years. If you can earn 6% on
your investments, how...

In a large open? economy, how would each of the following events
affect the equilibrium interest? rate?
A natural disaster causes extensive damage to? homes, bridges,
and? highways, leading to increased investment spending to repair
the damaged infrastructure.
A. The supply of loanable funds would? increase, decreasing the
interest rate.
B. The supply of loanable funds would? decrease, increasing the
interest rate.
C. The demand for loanable funds would? increase, increasing the
interest rate.
D. The demand for loanable funds...

1.You are 18 today want to retire at age 65.
Starting with the day of your retirement, you would like to have an
annuity initially in the amount of $35,000 per year (but growing at
a 3% annual rate) for 35 years. You
will inherit $30,000 from your long lost uncle when you turn 34 and
save that money as part of your financial plan. Assume an interest
rate of 7% for all periods? How much must you put into...

Using demand and supply analysis, illustrate how each of the
following scenarios would affect the equilibrium price and quantity
in the respective markets. The use of carefully labelled diagrams
is required with an explanation. a. The introduction of a new
technology reduces the cost of production for all firms in the
computer market. b. A strong advertising campaign has caused the
consumer to demand more Pepsi at every existing price. c. The
passage of Dorian a category 5 hurricane destroys...

1. Consider an economy that produces and consumes bread and
automobiles. In the table below are data for two different
years:
Year 2010
Year 2025
Price of an automobile
$50,000
$60,000
Price of a loaf of bread
$10
$20
Number of automobiles produced
100
120
Number of loaves of bread produced
500,000
400,000
Using the year 2010 as the base year, compute the following:
nominal GDP, implicit price deflator and the CPI.
2.
Assume that GDP (Y) is 5,000. Consumption...

You are trying to decide how much to save for retirement. Assume
you plan to save $4,000 per year with the first investment made one
year from now. You think you can earn 8.0% per year on your
investments and you plan to retire in 34 years, immediately after
making your last $4,000 investment.
a. How much will you have in your retirement account on the day
you retire?
b. If, instead of investing $4,000 per year, you wanted...

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