TAILIEUCHUNG - Lecture Macroeconomics (20/e): Chapter 16 - McConnell, Brue, Flynn

Chapter 16 - This chapter starts by introducing the transactions and asset demand for money and explaining how the interaction of the demand and supply of money determine the interest rates in the market. Banks’ balance sheets are used to explain how open market operations is effective in changing the money supply. | Chapter 16 Rent, Interest, and Profit Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. In this chapter, we will define economic rent and explore the factors that impact its value. Then we will look at the price of money, or interest rates, and how the interest rates are determined using the loanable funds theory. Along with interest rates, we will investigate present and future values of money. Lastly, we will examine the role of profits in the allocation of resources. Economic Rent Price paid for land and other natural resources Perfectly inelasticity supply Changes in demand A surplus payment LO1 Economists use the term “rent” to mean economic rent. Economic rent is the price paid for the use of land and other natural resources that are completely fixed in total supply. This fixed overall supply distinguishes rental payments from wage, interest, and profit payments. For all .

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