subprime loan mortgage a type of loan that is offered at a rate above prime to individuals who do...
Post on 18-Jan-2016
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Subprime Loan Mortgage A type of loan that is offered at a rate above prime
to individuals who do not qualify for prime rate loans.
Quite often, subprime borrowers are often turned away from traditional lenders because of their low credit ratings or other factors that suggest that they have a reasonable chance of defaulting on the debt repayment.
Subprime loans tend to have a higher interest rate and a variable rate than the prime rate offered on traditional loans. The additional percentage points of interest often translate to tens of thousands of dollars worth of additional interest payments over the life of a longer term loan.
Subprime Crisis: The loans the banks gave to the people with bad
credit turned into securities. These securities were bundled and were being
traded in the market. They were given ratings and a value- but it was
based upon nothing. Once the market plummeted the banks turned to
the people for payment- the people could not make the payments because the variable interest has skyrocketed.
As a result the people lost their homes, banks lost their money and government was forced to intervene.
Wine (thousands of bottles)
Grain (thousands of bushels)
0 15
5 14
9 12
12 9
14 5
15 0
underutilized
efficientgrowth
Make sure you understand underutilization, and what the shifting of the curve left and right means for a nation.
Equilibrium = the point at which quantity demanded and quantity supplied are equal
International Discoveries/
Conflicts
Number of Suppliers in Market
Producer Expectations
Government Influence
Input Costs
Changes in Supply
So what causes a shift in the demand curve?
Changes in
Demand
Consumer Tastes
Population
Income Consumer Expectations
Prices of related goods
How do we calculate elasticity?
If elasticity is less than one then demand is inelastic.
If elasticity is above one then demand is elastic.
If elasticity is equal to then it is unitary elastic.
Percentage change in quantity demanded
Percentage change in price
•Elasticity =
Percentage change
Original number – New Number
Original number= 100 x
1. Calculate elasticity for each example.
a. Elasticity: Is the good elastic, inelastic or unitary elastic? Why?
b. Elasticity: Is the good elastic, inelastic or unitary elastic? Why?
c. Elasticity: Is the good elastic, inelastic or unitary elastic? Why?
Price Quantity Demanded
Initial New Initial New 60 43 240 100
Price Quantity Demanded
Initial New Initial New 90 85 30 28
Price Quantity Demanded
Initial New Initial New 95 85 80 70
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