{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

KIC000018 - Interest Rate Determinants FIN 327 Prof Hood...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Interest Rate Determinants FIN 327 Prof. Hood Simple Case For now, leis assume mat we live in a closed eoonomy andthere Is no inflation. if everyone consumed exactly what they produced, there would be no savings or borrowing. This is notthe case. We need to establish what the supply and demand of loanable funds are. In economic terms, an equilibrium wlll exist if supply = demand fora given rate. Lets assume that people seek to maximize their expected utility or happiness. No Exchange - Consider yourself as mlklng a consumption decision between nowand later lperlodS= 0,1). You are endowed with a level of whom. Y. . . You can either consume all the wheat new, or plant some or allofthe seed to be consumed next period. - me more wheat you plant, the less marginal output you get from the field for next period. You wantto moose the optimal mmbination of Wheat :0 consume (q , C, ) in period D and 1 dual maximizes your utililv- - Generalizingihis, we have a production frontier that is concave holding labor msunL 9/1/2010 2' i E i’ F. :L i. g g is ‘ mummymiwgqeamnrmwwwe ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern