3. For each of the following statements, (1) identify the market that you are graphing (or the good you are drawing the market for), (2) show the changes on your graph, (3) identify the factor causing the change, (4) state what happens to the price and quantity (increase or decrease). Please use the format provided as an example in the question. a. Bob's burger joint notices that the price of hotdogs is increasing Market: Factor: Equilibrium Price: Equilibrium Quantity: b. Over the last year, consumers have expected the price of honey to increase due to the decrease in the numbers of European honeybees. Market: Factor: Equilibrium Price: Equilibrium Quantity:7. Suppose that you have an economy where the government does not have a deficit and the demand for loanable funds and supply of loanable funds are as follows (if r = 0.2, it is an interest rate of 20%): Demand: r = 0.6 - 0.0002Q Supply: r = 0.0001Q a. Graph the demand and supply of loanable funds b. What is the equilibrium interest rate and equilibrium quantity in the market? Interest rate: Quantity: c. Now the government has a budget deficit that causes the supply of loanable funds to change to r= 0.03 + 0.0001Q. What is the new equilibrium interest rate and quantity? Interest rate: Quantity: d. Is there crowding out in this economy with the new deficit? If so, calculate the amount that private investment is being crowded out and explain why it is happening. Crowding out: 6 58. Do the following events have their Initial or short run Impact on aggregate demand, long run aggregate supply, or short run aggregate supply? Do the curves shift to the right or to the left? Show, using a graph for each question. a. The new government in Canada increases subsidies to producers of raw materials. AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: b. There has been a decrease in nominal wages across Canada. AD/AS/LRAS: Equilibrium Price: Equilibrium Quantity: c. Canadian producers expect the future demand for their products will be high due to increases in incomes earned across Canada AD/AS/LRAS: 9 Equilibrium Price: Equilibrium Quantity: 69. Suppose the economy had been operating at its potential level of real GDP in the past, but consumer and investment spending have suddenly and substantially increased causing inflation. The increase is expected to last for a significant period of time. (a) Use an appropriate diagram to illustrate the initial impact of stated event on the economy. (b) What impact would the event have on the economy's [i] price level, [ii] level of real GDP, [ili] unemployment rate, and [iv] government budget deficit [i.e. increase, decrease, no effect, indeterminate]? [i] Price: [ii] Real GDP: [ili] Unemployment: [iv] Budget Deficit: (c) Describe two different examples of government fiscal policy that could be used to correct the situation outlined at the start of the question. (2 marks) Lii 7Use an appropriate diagram to illustrate the impact of stated event on the economy of the fiscal policies you have described. (d) When compared to the economy's position prior to the use of such policies, what specific impact would the fiscal policies have on the economy's [i] price level, [ii] level of real GDP, [ili] unemployment rate, and [iv] government budget deficit [i.e. increase, decrease, no effect, or is the outcome indeterminate]? [i] Price: [ii] Real GDP: [ili] Unemployment: [iv] Budget Deficit: 12