Suppose that your economy is in long run equilibrium, then the following shock occurred. The aggregate demand and aggregate supply in the market is represented by the following: LRAS P AS₂ Rate AD₂ What should the Bank of Canada do to close the gap? State whether you think it will be A, B, C, D, E, F, G, H, I, J and/or K. In your answer only include the letter. Put all choices that could apply. If you think it is ACD you can put both letters (put in alphabetical order!). Answer: AD₁ A. Increase taxes B. Decrease taxes E. Decrease Price of Bonds Increase Price of Bonds G. Increase the reserve ratio H. Decrease the Reserve Ratio I. Increase Bank J. Decrease Bank Rate. K. Nothing F.

Suppose that your economy is in long run equilibrium, then the following shock occurred. The aggregate demand and aggregate supply in the market is represented by the following: LRAS P AS₂ Rate AD₂ What should the Bank of Canada do to close the gap? State whether you think it will be A, B, C, D, E, F, G, H, I, J and/or K. In your answer only include the letter. Put all choices that could apply. If you think it is ACD you can put both letters (put in alphabetical order!). Answer: AD₁ A. Increase taxes B. Decrease taxes E. Decrease Price of Bonds Increase Price of Bonds G. Increase the reserve ratio H. Decrease the Reserve Ratio I. Increase Bank J. Decrease Bank Rate. K. Nothing F.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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MOER The table below shows how supply and demand Price ($/gal) Demand (million of gal.) 1 1.2 790 700 1.4 640 1.6 580 1.95 497 2.2 450 2.4 430 2.6 420 2.8 390 3 360 Note: there is some randomization in the above data to account for price fluctuations. Make sure to check that you input the correct data in your device. Perform the following work • Assume that Supply has a quadratic relationship with the price. Find this relationship (the help buttons contain an article to compute trend-lines in Excel): -21.935p² + 207.365p+339.085 Round your answer to 3 decimal places S(p) ● D(p): = 1.53 • Assume that the Demand has a quadratic relationship with the price. Find this relationship (the help button links to an article to compute trend-lines in Excel): 85.561p² - 543.789p + 1236.729 Round your answer to 3 decimal places Video Solve | Sn... of gasoliine vary depending on the price: Supply (million of gal.) 511 550 600 641 660 680 700 720 735 786 605 - • Use the trendlines to find the price…
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2. An economist is interested in the variation of the price of a single product. It is observed that a high price for the product in the market attracts more suppliers. However, increasing the quantity of the product supplied tends to drive the price down. Over time, there is an interaction between the price and supply. The economist has proposed the following mode, where Pn represents the price of the product at year n, and Qn the quantity: (a) Explain the significance of the constants 500 and 100 in the proposed equation. (b) Explain the significance of the signs of the constants -0.1 and 0.2. (c) Simulate the system using the following initial conditions (plot the trajectories) and predict the long term behavior of the dynamical system. Po 100 and Qo= 500 • Po= 200 and Qo = 500 ● Po 100 and Qo = 600 Po 90 and Qo = 400 [Pn+1 = Pn -0.1 (Qn - 500) [Qn+1 =Qn +0.2 (Pn - 100) ●