Depreciation; Theory of Loanable Funds; Two Interest Rate Functions

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来自 University of California, Irvine 的课程

微观经济学的力量：真实世界中的经济学原理

828 个评分

University of California, Irvine

微观经济学的力量：真实世界中的经济学原理

828 个评分

In this course, you will learn all of the major principles of microeconomics normally taught in a quarter or semester course to college undergraduates or MBA students. Perhaps more importantly, you will also learn how to apply these principles to a wide variety of real world situations in both your personal and professional lives. In this way, the Power of Microeconomics will help you prosper in an increasingly competitive environment. Note that this course is a companion to the Power of Macroeconomics. If you take both courses, you will learn all of the major principles normally taught in a year-long introductory economics college course.

从本节课中

The Capital Market, Interest, and Profits

Capital Analysis in the Real World; Three Categories of Capital Goods; Interest Rate Defined; Rate of Return 7:37

Depreciation; Theory of Loanable Funds; Two Interest Rate Functions 5:46

How Shifts in Demand and Supply Affect Interest Rates; Investment Analysis Over Time; Net Present Value; Perpetuities6:48

NPV In the Real World; NPV Equation 4:11

Real World Applications of NPV 4:39

Interest Rates In The Real World; Factors Determining Interest Rates 3:24

与讲师见面

Dr. Peter Navarro
Professor
Paul Merage School of Business

[MUSIC]

In the ugly duckling example, I mentioned

the word depreciation but didn't really define it.

It's a very, very important concept in the

analysis of capital, so let me do that now.

Both investment and depreciation are flow concepts, meaning

that they are measured per unit of time.

This is in contrast to capital, which is a

stock concept, meaning that capital is measured at a given

point in time.

Depreciation is an estimate of the loss in the dollar value of a

capital good, due to obsolescence or wear and tear during a period of time.

And corporations are allowed to treat depreciation as an expense on

their taxes, just like other expenses, like labor costs and raw materials.

When depreciation over a period of

time exceeds investment over the same period

of time, the capital stock will decrease.

Whereas if investment exceeds depreciation,

the capital stock will increase.

For example, suppose the firm ends its fiscal

year with a capital stock of $1 million.

And then over the course of the

current year, invests $100,000 in new plant equipment.

At the same

time, it incurs depreciation of 200,000 dollars.

What is it's capital stock at the end of the current year?

[SOUND]

That's right, it's 900,000 dollars.

Now that we understand both the interest rate

and the rate of return, let's next come

to understand how the interaction of these two

variables determine investment decisions in a market economy.

In a nutshell, we are about to see that

firms will demand loanable funds to invest in new

projects, so long as the rate of return on

capital is greater than or equal to the interest rate

paid on funds borrowed.

Let me demonstrate this for you by first introducing the theory of loanable funds.

This market illustrates the market for loanable funds.

Note that there is an upward sloping

supply curve, a downward sloping demand curve, and

an equilibrium interest rate of, in this case,

8%, where the supply and demand curves cross.

The theory of loanable funds is based on the assumption that households

supply funds for investment by abstaining

from consumption and accumulating savings over time.

The upward sloping supply curve of loanable funds, reflects

the idea that households prefer present consumption to future consumption.

And therefore must be paid an interest rate bribe

to induce them to save rather than consume.

You can see the higher the interest rate,

the larger the amount households are willing to save.

On the demand side, it is businesses that demand loanable funds

to build new plants or warehouses, or to purchase machinery and equipment.

Why do you think this curve is downward sloping?

The idea here is that, other things equal.

There will be more potential investments that will be

profitable at lower interest rates than at higher interest rates.

Let me illustrate this by recalling our

earlier example of the ugly duckling car rental.

In that example, the company bought a used Ford for $10,000,

earned a net rental of $1,200 and wound up with a 12%

rate of return on its investment. Now, suppose the company wants to borrow

some money from the market for loanable funds to buy an identical used ford.

And it projects an identical rate of return on its investment.

If the interest rate is 10%, it will surely borrow the money, because

the rate of return that it can earn using the funds exceeds that.

However,

suppose the interest rate is 15%, what will it do?

That's right.

It won't borrow the money, and it therefore won't make the new investment.

This example, not only shows us why the

demand curve for loanable funds is downward sloping, it

also helps explain equilibrium in the market, where

the supply of funds equals the demand for funds.

In our figure, equilibrium occurs at an interest rate of 8%.

But suppose the market rate

of interest were instead 10%.

In that case, the supply of funds would exceed the demand for funds.

Because, not enough businesses could find investments capable

of generating at least a 10% rate of return.

And because of this surplus of funds,

lenders would have to lower the interest rate.

In contrast, if the interest rate were 6% in this

market, there would be plenty of businesses demanding the funds.

However, there wouldn't be enough households willing

to forego present consumption to meet that demand.

The result?

Excess demand would bid up the interest rate and drive

that rate back to where the supply and demand curves cross.

From this discussion, we can see then

that the market interest rate serves two functions.

It rations out society's scarce supply of capital goods

for the uses that have the highest rates of return.

And it induces people to sacrifice current consumption

in order to increase the stock of capital.

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