Q1. The gasoline price has rapidly gone up lately. What will happen to the gasoline price from now under the following scenarios? Ignore the impact of inflation.

Scenario 1: The demand for gasoline continues to rise, but the production of petroleum, an important ingredient of gasoline, does not. Both OPEC and the so-called frackers in the United States are reluctant to expand their petroleum production. (2 points)

Scenario 2: The demand for gasoline will start to decline because of new lockdown measures introduced to combat the delta variant while OPEC and frackers increase petroleum production. (2 points)

Q2. The house price has rapidly gone up lately. What will happen to the house price if the imminent end of the federal foreclosure moratorium enables mortgage-holding banks to repossess and sell foreclosed houses while the Fed raises interest rates at the same time? Ignore impact of inflation. (3 points)