How will the interest rate and planned investment spending change as the following events occur?

How will the interest rate and planned investment spending change as the following events occur?

a. An increase in the quantity of money by the Federal Reserve increases the amount of money that people wish to lend at any interest rate.

c. Baby boomers begin to retire in large numbers and reduce their savings.

I am a little bit lost. I'm learning about the interest rates, spending, and the multiplier in my Macroeconomics class right now.

a. This will decrease the interest rate (cost of money) becasue the supply of money has increased. Lower rates will mean more spending, looser credit, and more planned investments (like houses and cars).

c. Inclined to say this will increase rates and decrease investment spending for the aforementioned reasons. Banks lend against savings, and when savings deposits are depleted, they will not be able to lend as much (although some will recycle right back into savings but probably not at a 1 to 1 ratio). Also, increased spending in masse by baby boomers will create inflationary pressure with also leads to higher interest rates, reducing planned investment.

Tags

　　Investment Trading 　　Investment Strategy 　　Investment Services 　　Investment Portfolio 　　Investment Plan 　　Investment Performance 　　Investment Options 　　Investment Opportunity 　　Investment Manager

Related information

Can i choose WIPRO for long run investment of a lac rupees for 100% profit after 3 years.?

You have already mentioned the upper limit you want to earn. But stock markets doesn't work in one direction (that is up only), some time they reverse the direction for which you should be re...

Other than a 401k plan & IRAs, what ways of investing would be good to see your $ grow with little investment

Purchasing stock is more risky, but if you are investing for the long term, you should be OK. Large stocks like Disney and Cisco may have periods where they dont' increase or even decrease, b...

I plan to buy a home in two years. What is the best investment strategy for that time period?

CD returns are low, but with your plans that is still your best option. The market is too risky for money you will need in two years. Try to find a bank that is offering a special rate for new ...

I have a 1 year child and want to make investment for her can u suggest me a best plan.?

Hi there, Your child is quite young. It is definitely good to see someone planning ahead. I am guessing that you do not have a lumpsum amount to invest. So whatever you keep on saving will b...

QUestion on Certificate in investment planning?

It will be recognised but it wont (always) mean that there will not be further exams for you to take if you wish to practise outside of Scotland. Check with FSA in UK where it will may give you so...

Tell me some short term investment plans with more interest in india(reliable)?

Read some investing tips on this site

...

Which term life insurance and investment plans?

i vote for term VGLI or USAA

...

What is systematic investment planning?

SIP ( Systematic Investment Plan ) is plan you take to invest in Mutual Funds. This is the ideal way to invest in a volatile market like stock market, where fluctuations are very high. In SIP yo...