[SOLVED] Macroeconomics – Savings and Investment

I’m stuck on a Economics question and need an explanation.

Struggling to find relevant content or pressed for time? – Don’t worry, we have a team of professionals to help you on
[SOLVED] Macroeconomics – Savings and Investment
Get a 15% Discount on this Paper
Order Now

Risk is a key characteristic to understanding interest rates. Interest rates are key to the loanable funds market. The goal of this exercise is to better understand how risk directly factors into interest rates. Let’s try this example.

Pretend you are a bank that has no costs whatsoever. Further, you’re a non-profit bank whose only goal is to break even. Explain what you need to set as your interest rate in the following situations in order to break even.

  • You have 10 people who are going to each borrow $1000. You expect 1 out of these 10 will default on their loan, and pay you back nothing. (Hint, you need to get back $10,000 in money from 9 people. Each will have to pay $10,000/9=$1,111. That means they would have to pay you $111 interest on $1000 loan. To calculate the interest rate ((1111-1000)/1000) = 11% would be the interest rate this group would have to pay.)
  • You have 100 people who are going to each borrow $1000. You expect 1 out of these 100 will default on their loan, and pay you back nothing.
  • Who will pay a higher interest rate? Why? How much of this difference in interest rate is due to the profit motive?
  • Can this help explain the paradox that the poor (Countries or People), who can less easily afford higher interest rates are often charged a higher rate? What do you think this does for long term growth for these populations?

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyCoursebay
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Professions and Applied Sciences
Thank you!
Customer 452707, March 4th, 2022
Social Work and Human Services
Great Work!
Customer 452587, September 8th, 2021
Fantastic work on this project as usual.
Customer 452707, July 5th, 2022
Human Resources Management (HRM)
Thank you
Customer 452531, May 19th, 2021
Customer 452813, June 25th, 2022
Application Letters
Well written essay, will definitely use this service in the future.
Customer 452773, April 14th, 2022
Database design and optimization
thanks for busting this out so expeditiously. I hope that I get a good grade.
Customer 452715, February 19th, 2022
Customer 452813, July 5th, 2022
Thank you for the outstanding work .
Customer 452635, June 5th, 2022
Perfectly done!
Customer 452707, July 18th, 2022
Thanks for your support
Customer 452701, February 3rd, 2022
Perfectly done! Thanks again.
Customer 452707, July 18th, 2022
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Order your essay today and save 15% with the discount code DC15


Thank you for choosing MyCoursebay. Your presence is a motivation to us. All papers are written from scratch. Plagiarism is not tolerated. Order now for a 15% discount

Order Now