Question 1 a. Draw a circular-flow diagram. Identify the parts of the model that correspond to the flow of goods and services and the flow of dollars for each of the following activities. i. Paul purchases a pair of shoes for $30. [2 marks] ii. iii. iv. Shannon receives a salary of $1,500 per week at the supermarket which she works. [2 marks] Honda Limited receives $20,000 for the sale of a sports utility vehicle. [2 marks] Mark earns $2,000 from his 15 percent ownership of Apple stock. [2 marks] i. b. Classify each of the following statements as positive or normative. Explain. Bahamas faces a trade-off between inflation and unemployment [2] marks] ii. iii. iv. The ECCB should reduce the interest rates [2 marks] St. Lucia ought to provide a pension for all citizens [2 marks] Higher tax rates discourage savings an working. [2 marks] Question 2 Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following scenarios. a. The market for gasoline i. Scenario 1: Electric cars have increased in popularity. [3 marks] ii. Scenario 2: The price of sports utility vehicles rises. [3 marks] b. The market for the cardigans i. Scenario 1: New knitting machines are invented. [3 marks] ii. Scenario 2: A caterpillar infestation destroys most of the cotton crop in Barbados [3 marks] c. The market for shrimp i. Scenario 1: More people become health conscious and realize the high cholesterol content of seafood. [3 marks] ii. Scenario 2: The price of fishing bait has decreased [3 marks]