a Explain why the direction of the GDP curves trend line imp

a) Explain why the direction of the GDP curve’s trend line impacts interest rates

b) Explain why the direction of the CPI curve’s trend line impacts interest rates

c) Explain why the direction of the Total Vehicle Sales curve’s trend line impacts interest rates

d) Explain why the direction of the MZM curve’s trend line impacts interest rates

e) Explain why the direction of the New Privately-Owned Housing Units Under Construction curve’s trend line impacts interest rates

Solution

The reason is during boom and gdp increase there is large demand for credit. Interest rate rises and during depression reverse happens

2 cpi shows inflation and mood in economy. If cpi is high inflation will be high, there will be greater Demand for credit and interest rise and when inflation falls reverse happens.

Total vehicle sales means more demand for credit for vehicles and thus interest rate rise and less demand means less demand for credit and thus less interest rates

Again privately owned houses are financed by credit market and more housing units construction mean more demand for credit and thus greater interest rates and reverse happens during when construction decreases

Can answer only 4 parts according to chegg policy