1. If a household's money income decreases due to external shocks such as COVID-19 pandemic and prices of goods and services do not change, what happens to the household's real income and budget line?

2. if a household has an income of $3,000 and buys only bus rides at $75 each and magazines at $50 each, what is the household's budget equation? Please use the symbols described in the first column of the below table when you write your formulas. The final formula should reflect the relationship between Qm and Qb, that is, Qm="your results".

Symbols	Description
Y	Household income
Qm	Quantity of magazine
Qb	Quantity of bus
Pm	Price of magazine
Pb	Price of bus

3. What determines the supply of loanable funds, and what makes it change? Explain your answers.

4. Use the following information to work on Problems (a) and (b).

Suppose that the New Zealand government lowers the tariff on imports of textiles from China from 100% to 50%.

a) Explain how the tariff on textiles will change the price that New Zealand consumers pay for textiles, the quantity of textiles imported, and the quantity of textiles produced in New Zealand. Based on this, please answer questions (a1), (a2) and (a3) below.

You need to first select the most appropriate answer from the given options and write your answer in the last column of the table below. Then, you need to explain your answers.

(a1) Step 1: Selecting the most appropriate answer (1 mark)

	Options	Your answer
The price that New Zealand consumers pay for textiles imported from China	A=decreased; B=unchanged; C=increased

(a1) Step 2: Explain your answers (4 marks).

(a2) Step 1: Selecting the most appropriate answer (1 mark)

	Options	Your answer
The quantity of textiles imported from China	A=decreased; B=unchanged; C=increased

(a2) Step 2: Explain your answers (4 marks).

(a3) Step 1: Selecting the most appropriate answer(1 mark)

	Options	Your answer
The quantity of textiles produced in New Zealand	A=decreased; B=unchanged; C=increased

(a3) Step 2: Explain your answers (4 marks).

b) Please explain how New Zealand and Chinese gains from the international trade will change (A=decrease; B=unchange; C=increase) (2 marks) and why (3 marks)?

c) Who in New Zealand will lose from the international trade (2 marks) and why (3 marks)?

d) Who in New Zealand will gain from the international trade (2 marks) and why (3 marks)?

5. Use the following information to work on Problems (a) and (b).

With free international trade between New Zealand and Canada, New Zealand would export beef to Canada, but Canada imposes an import quota on New Zealand beef.

a) Explain how this quota influences the price that Canadian consumers pay for beef, the quantity of beef produced in Canada and the Canadian and New Zealand gains from trade. Based on this, please answer questions (a1), (a2) and (a3) below.

You need to first select the most appropriate answer from the given options and write your answer in the last column of the table below. Then, you need to explain your answers.

(a1) Step 1: Selecting the most appropriate answer (1 mark)

	Options	Your answer
The price that Canadian consumers pay for beef	A=decreased; B=unchanged; C=increased

(a1) Step 2: Explain your answers (4 marks).

(a2)Step 1: Selecting the most appropriate answer (1 mark)

	Options	Your answer
The quantity of beef produced in Canada	A=decreased; B=unchanged; C=increased

(a2) Step 2: Explain your answers (4 marks).

(a3) Step 1: Selecting the most appropriate answer (1 mark)

	Options	Your answer
The gains thatCanada and New Zealand received from the trade	A=decreased; B=unchanged; C=increased

(a3) Step 2: Explain your answers (4 marks).

b) Explain who in Canada and New Zealand will gain from the quota on beef imports (2 marks) and why (3 marks).

c) Explain who in Canada and New Zealand will lose from the quota on beef imports (2 marks) and why (3 marks).

6. Use the following information to work on Problems (a) and (b). Show all your workings.

Sara's income is $1,000 a week. The price of popcorn decreases from $100 to $50 a bag, and the price of a smoothie is unchanged at $25.

a) How does the decrease in the price of popcorn affect Sara's real income in terms of smoothies and her real income in terms of popcorn? Show all your workings.

(5 marks)

b) How does the decrease in the price of popcorn affect the relative price of a smoothie in terms of popcorn? What is the slope of Sara's new budget line if it is drawn with smoothies on the X-axis? Show all your workings.

(5 marks)