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quantity supplied of loanable funds decrease as well. Interest rates differ because of risk, term of the loan, and the cost of making the loan. Nominal interest rate is the interest rate determined by the forces of supply and demand in the loanable funds market. Real interest rate is the nominal interest rate adjusted for expected inflation, that is, the nominal interest rate minus the expected inflation rate. Present value is the current worth of some future dollar amount of income or receipts. An entrepreneurship is someone who has talent for organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and develop new ways of doing things.In chapter 16, I learned about what is interest, rent, and profit. For rent, the concept of economic surplus is shown to have lead some to recommend a single tax on rent. Interest differentials are explained by its determinants. Profits are shown to play an important role in permitting economic change. Economic rent is a payment exclusively for the use of land. Difficulties in measurement and analysis result from the fact that the use of land is enhanced by improvements (such as a building) and payment for these improvements is made an integral part of rent.
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