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Suppose that in the City of Ottawa, the demand for new houses is given by Qd = D(P,i) = 1000-5P -10i (1) and the supply by Qs = S(P,u) = 500 + 4P + 5u, (2) where P is the price of houses, i the nominal interest rate set by the Bank of Canada, and u the unemployment rate in the City of Ottawa. (a) Plot the supply and demand curves on a plot with "Quantity of houses" on the horizontal axis, and "Price of houses" on the vertical axis. (b) Solve for the equilibrium price P∗ and equilibrium quantity Q∗ in terms of i and u, and also show the location of this equilibrium on your plot. (c) What is the value of the vertical intercept of the Qd line? What is the value of the vertical intercept of the Qs line? (d)For each of the variables P,u, explain whether they cause movement along the Qs curve, or a shift in the Qs curve. (e) In terms of your plot, what does the partial derivative ∂D(P,i) ∂P de- scribe? What about ∂D(P,i) ∂i ? (f) Now draw a new plot with "Quantity of houses" on the horizontal axis, and "nominal interest rate" on the vertical axis, and plot the demand equation Qd = D(P,i) = 1000-5P -10i only. (g) For each of the variables P,i, explain whether they cause movement along the Qd curve, or a shift in the Qd curve.
Distinguish between an 'exact' and a 'not exact' relationship between X and Y.
Explain what happens to the primary deficit in year t if the nominal interest rate in year t increases to 17%.
Residents of your city are charged a fixed weekly fee of $6 for garbage collection. They are allowed to put out as many cans as they wish. The average household disposes of three cans of garbage per week under this plan.
Greengenes' landlord rejoices, saying, "According to the leftover principle, you will pay me $300 more in rent." Is the landlord correct. If not, is he applying the leftover principle incorrectly, or is the principle wrong
How does the amount of unemployment created by an increase in the minimum wage depend on the elasticity of labor demand do you think an increase in the minimum wage will have a greater unemployment effect in the fast-food industry or in the lawn-c..
A function of government is to regulate natural monopolies. Describe what is a natural monopoly and why it needs government regulation
The range of reserve requirements that the Board of Governors can set for net transaction accounts is a. 3 to 6 percent b. 8 to 14 percent c. 3 to 14 percent d. 0 to 9 percent
You plan a major adventure trip for the summer. You won’t be able to take your usual summer job that pays $6,000, and you won’t be able to live at home for free. The cost of your travel
Graph the supply and demand schedule for pizza using $5 through $15 as the value of p. In equilibrium, how many pizzas would be sold at what price?
The demand curve for the product X is given by Qdx = 460 - 4Px. How much consumer surplus do consumers receive when Px = $35?
Discuss why a firm's long-run costs are minimized when it employs the mix of resources such that the ratio of all of the resources' marginal products to their wage rates are equalized. Employ a graph to illustrate.
Why does the short-run market supply curve for a product slope upward to the right? Why does the long-run market supply curve generally slope upward to the right?
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