Using demand and supply curves show the impact

Using demand and supply curves show the impact

Using demand and supply curves show the impact

Assignment
Total marks: 60

1.
(20 marks) Using demand and supply curves show the
impact of the following:

Make sure you label your axis, your supply and demand curves, as well
as the movement of price (P to P1) and quantity (Q to Q1).

The impact of a
price decrease of rice on the market for potatoes:

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.0/msohtmlclip1/01/clip_image002.gif”>Impact on price:

.0/msohtmlclip1/01/clip_image003.gif”>Impact on quantity:

The expectation
of a price increase on the market for coffee:

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.0/msohtmlclip1/01/clip_image002.gif”>Impact on price:

.0/msohtmlclip1/01/clip_image004.gif”>Impact on quantity:

The impact of a
decrease in the price of memory chips on the market for computers:

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.0/msohtmlclip1/01/clip_image002.gif”>Impact on price:

.0/msohtmlclip1/01/clip_image003.gif”>Impact on quantity:

The impact of
an increase in excise taxes on refrigerators on the market for
refrigerators:

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.0/msohtmlclip1/01/clip_image002.gif”>Impact on price:

.0/msohtmlclip1/01/clip_image003.gif”>Impact on quantity:

The impact of
the government imposing a price ceiling on apartment rents:

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.0/msohtmlclip1/01/clip_image005.gif”>Impact on rental price:

.0/msohtmlclip1/01/clip_image004.gif”>Impact on quantity
supplied:

.0/msohtmlclip1/01/clip_image006.gif”>Impact on quantity
demanded:

If the demand
for many farm products is inelastic, why would a bad crop, that is, fewer
crops harvested, be to the advantage of farmers? Use demand and supply curves to illustrate your answer.

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What would be the impact on farmers total
revenue?______________________________________

2.
(6 marks) Is the equilibrium
level of GDP necessarily an ideal economic situation?
(Use aggregate demand and aggregate supply curves to illustrate your
answer.)

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List three factors which might cause the aggregate
demand curve to shift to the right:
____________________________________________________________________________________________________________________________________________________________________________________

3. (6 marks) The following is the Consumer
Price Index for Canada for the years 2009 to 2011. (The CPI for 2002 = 100.0).
Calculate the annual rate of inflation for 2009, 2010 and 2011. Your answer
should be accurate to 2 decimal places.

Date

CPI

Rate of Inflation

January-01-09

113.0

2009

January-01-10

115.1

2010

January-01-11

117.8

2011

January-01-12

120.7

4. (8 marks) Examine the following partial
balance sheet for ABC Bank:

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Assume the bank requires a 5% reserve ratio

a) What are the current
excess reserves of the bank?_________________
b) If ABC Bank decides to
lend out the excess reserves, what is the potential increase in the money
supply?_____________
c) Assume $20,000 is
withdrawn from the bank, what are the excess reserves of the bank
now?__________________
d) If ABC Bank decides to
lend out the excess reserves, what is now the potential increase in the
money supply?_____________

5. (5 marks) What impact will an decrease in
the money supply have on:

a. Interest
rates_____________________
b. Business
investment____________________
c.
Aggregate demand__________________
d. Employment in
Canada_________________
e.
Prices___________________

6. (15 marks) Briefly answer the following
questions using Microsoft Word:
§ Your answers will reflect the correct use
of grammar, spelling, and vocabulary and terms associated with the subject
matter.
§ Content will be relevant, accurate and
concise.

a. The Canadian government spends money on
military equipment. What is the opportunity cost of this spending?
b. Why are the services performed by
volunteers not included in the calculation of GDP? Should the work of
volunteers be recognized in the National Accounts?
c.
Why is
RGDP (Real Gross Domestic Product) a better indicator of the amount of goods
and services produced than GDP?
d. In a recession, government should not
undertake any additional expenditures. Comment on this statement.
e.
Will
increases in government spending be sufficient to provide everybody with a job?
In your answer consider the major types of unemployment: demand-deficient,
frictional, seasonal, and structural.

 

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