Use the market for foreign exchange to analyze the effect of the
following events. In your graph, make sure to identify the effect
of each of these events on the US dollar (i.e. does the dollar get
weaker/stronger?) Explain in 1-2 sentences what each of your graphs
is showing. Important: Treat each event separately (i.e. draw a
separate graph for each event).
a. American companies discover a new technology that allows them
to become much more productive.
b. The Central...
Q2. Draw a neatly labelled diagram indicating the price effect –
the direction of substitution effect and the direction of income
effect separately, for a normal good when price of Good-X (on
X-axis) increases.
Q3. Given a supply curve equation Qs=500(P-2) and
demand curve equation Qd=11000-1000P.
Find the equilibrium price and quantity.
Draw a neat diagram of the equilibrium situation with
everything labelled properly.
Calculate consumer surplus, producer surplus and deadweight
loss (if any) at equilibrium.
Suppose the government mandates...
Draw a well-presented and well-labelled supply and demand
diagram to show the welfare effects of rent control.
Using your diagram from part (a) construct a well-presented
table that shows the consumer surplus, producer surplus, total
surplus and deadweight loss both before and after the rent control
has been put in place.
According to your diagram has consumer surplus increased or
decreased? Briefly explain consumer surplus has decreased or
increased.
Draw fully labelled graphs to get full credits.
(a) Use the financial market diagram to derive the LM curve when
there is an interest rate target. Explain.
(b) What is the slope and intercept of the LM curve when there
is an interest rate target?
(c) When is a fiscal policy more effective at changing the level
of output: when the central bank maintains a fixed real money
supply or when the central bank sets an interest rate target? Draw...
1. Use of a demand/supply diagram to analyze the market for
energy - calculating the equilibrium quantities and prices - with
taxes and with subsidies.
using well labelled diagram,explain how the
equilibrium price and the equilibrium quantity of apples will
change as a result of the following;
-a change in the wages of farm workers from R150 per day to R200
per day
-a decrease in the price of fertilizers and a concurrent increase
in the demand for Apple juice