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ECON-1012-B-Introduction to Macroeconomics

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At the beginning of the year, Tom's Tubes has capital of 5 tube-inflating machines. During the year, Tom scraps 2 old machines and purchases 3 new machines. What is Tom's net investment for the year?
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In January 2024, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the machines fell by 30 percent. During 2024, Tim spent $200,000 on new machines. What was Tim's gross investment in 2024?
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Elena owns a bond with a price of $5,000, which pays $500 per year. If the price of the bond rises in the bond market to $7,500, what is the new interest rate on Elena's bond?
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Table 7.2.1

Real interest rate

(percent per year)
Loanable funds demanded

(trillions of 2012 dollars)
Loanable funds supplied

(trillions of 2012 dollars)
46.54.5
56.05.0
65.55.5
75.06.0
84.56.5
94.07.0
103.57.5

Refer to Table 7.2.1, which gives data about a loanable funds market. What is the equilibrium quantity of investment?
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Complete the following equation:

Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate.
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Short Description: A line graph of real interest rate versus loanable funds. Long Description: The vertical axis is labelled, real interest rate (percent per year) and ranges from 0 to 10 in increments of 2. The horizontal axis is labelled, loanable funds (billions of 20 12 dollars) and ranges from 0 to 900 in increments of 150. The line for D L F slopes downward from the upper left corner to the lower right corner passing through the points (150, 10), (300, 8), (450, 6), (600, 4), and (750, 2).

Figure 7.2.3

Refer to Figure 7.2.3, which shows the demand for loanable funds curve. If the real interest rate is 6 percent, what happens to the quantity of loanable funds demanded when expected profit decreases?

The new quantity of loanable funds demanded
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In 2024, Tim's Gyms finances the building of a new gym with a loan from its bank. If Tim's Gym fails to make payments, the bank receives ownership of the gym. What is the source of the funds Tim's Gyms used?
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In the market for loanable funds, if the interest rate is above the market equilibrium interest rate, which of the following events occurs?
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If the real interest rate is below the market equilibrium real interest rate, what change occurs in the market?
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What determines national saving?
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