question archive NYC taxi medallions sold for $533,000 in September 2008, $615,000 in September 2010, and over $1
NYC taxi medallions sold for $533,000 in September 2008, $615,000 in September 2010, and over $1
Subject:EconomicsPrice:2.88 Bought3
NYC taxi medallions sold for $533,000 in September 2008, $615,000 in September 2010, and over $1.2 million early in 2011. Over the same period, the interest rate ("yield") on a 10-year US treasury note fell from about 4% to about 2%. Explain why the following statement is true When interest rates fall sharply all else the same, taxi medallion prices must rise sharply.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Interest rate falling is an indicator of expected recession or slowdown because the people would want to save more rather than to consume hence price of bond will increase and since we know price of bond and interest rates have negative relationship, so fall in interest rates indicates rise in the price of bonds which in turn indicates less high savings and less consumption, which leads to decrease in demand and price levels of goods and services in the economy will fall.
