1. What are the loans discussed in this text used for, and are they secured (i.e. with collateral) or unsecured (i.e. with out collateral)? What role, if any, is performed by collateral?
2. Does the curiosity rate charged depend upon the wealth of the borrower? Illustrate your argument using a diagram with consumption now on the horizontal axis and consumption later on the vertical axis.
3. In the video, Marcelina Mojica mentions that she went bankrupt (a legal process that may comply with when a person or a enterprise is insolvent). Utilizing data in the article, present a plausible clarification of why she went bankrupt, referring to the assets and moneylender company liabilities in her balance sheet.
In an economic system with a population of 100, there are eighty farmers and 20 lenders. The farmers use the funds to finance the planting and tending of their crops. The rate of revenue for the harvest is 12.5%, whereas the curiosity price charged is 10%. Compare the following two circumstances:
(2) When the names of the companions have been declared in compliance with a notice or order given or made beneath paragraph (1), the proceedings shall proceed within the identify of the firm however with the same penalties as would have ensured if the persons whose names have been so declared had been named as plaintiffs in the writ.
To take account of inflation when analysing borrowing and lending, we should use the actual curiosity charge as a result of it represents what number of goods in the future one will get for the goods not consumed now. The Fisher equation, named after Irving Fisher (1867-1947), summarizes the relationship between the true and nominal interest charges, and inflation:
– Mr Bond’s disposable revenue is £40,000.
– Mr Bond’s web earnings is £28,000.
– The maximum quantity of consumption expenditure potential for Mr Bond is £23,000.
– If Mr Bond decides to spend 60% of his net income on consumption and the remaining on funding, then his funding is £9,200.