You are getting a loan to buy your first home. It is a $250,000 home with three bedrooms and two bathrooms. The price is so low because the economy was bad, a lot of people lost their jobs, and few people are buying homes. You got the following information from the bank: Loan Amount: $150,000 Interest Rate 1 month ago: 4.5% Today: 4.1% Loan Period: 15 years (180 months) 1.Based on what you are hearing from friends and what you know about supply and demand in financial markets, what would you predict about the level of interest rates for house loans in the future? Will they stay the same, increase, or decrease? 2.Explain your answer by drawing and explaining two supply and demand curves: one showing the interest rate today (assume it is 4.1%) and one predicting what the interest rate will look like in one month. 3.
You are getting a loan to buy your first home. It is a $250,000 home with three bedrooms and two bathrooms. The price is so low because the economy was bad, a lot of people lost their jobs, and few people are buying homes. You got the following information from the bank:
- Loan Amount: $150,000
- Interest Rate
- 1 month ago: 4.5%
- Today: 4.1%
- Loan Period: 15 years (180 months)
1.Based on what you are hearing from friends and what you know about supply and demand in financial markets, what would you predict about the level of interest rates for house loans in the future? Will they stay the same, increase, or decrease?
2.Explain your answer by drawing and explaining two supply and demand
3.
In the business cycle, a recession is a negative trend characterised by a decline in production and employment, which has an impact on household incomes and spending. A recession makes people's expectations for the future less certain, which causes them to put off making large purchases or investments, even if not all households and businesses really experience a decrease in income.A recession may begin when the real GDP growth rate initially declines, but occasionally growth may decline one quarter and then increase the following. It's challenging to tell whether you're in a recession based just on GDP since the Bureau of Economic Analysis may modify the estimate in its upcoming report.
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