Suppose the loanable funds supplied by private households (SP) is i = 2 + 0.01LF where i is interest rate in percentage term and L F is amount of loanable funds. The demand for loanable funds (DLF) is 1' = 7 0.01LF. (a) ('3) Assume the government has a budget surplus of 100. Explain how you can use the information provided to plot the supply of loanable funds (SLF) curve in the graph provided below. Then, plot the demand for loanable funds (DLF) curve in the same graph. Explain how to determine the equilibrium interest rate i'\Let k be the physical capital stock per worker and y be the real aggregate output per worker. Assume diminishing marginal productivity of physical capital per worker in the aggregate production function f (k) expressed in terms of real output per worker y = f (k) for any given level of human capital and natural resources per worker, and technology. (a) Use a properly labeled graph to help you explain why it is typically the "widening gap\" phenomenon observed in reality. (b) What is the major policy implication from the \"widening gap" phenomenon? Use the \"walls" built in the world to help illustrate your point. 3. Suppose the domestic country is an open economy and produces three goods (E F, and G) and its residents also consume three goods (E, F, and H). The table below lists prices of these goods. Show your step-by-step derivation/calculation or a zero will be assigned. Year PE PF PG PH 1 7 4 6 5 2 7 5 7 5 3 9 6 8 6 (a) The table below lists the quantities of each of the three goods that the domestic country produces every year. Calculate nominal GDP (YN) and real GDP (YR) using Year 1 as the base year. Calculate the GDP deflator, use it to calculate the inflation rates from Year 1 to Year 2 and from Year 2 to Year 3. Put your results in the tables provided. Year QE QF QG 1 150 250 140 2 150 300 160 3 200 350 180 E F G YN Year PE QF TEE PF OF TEF PG QG TE 1 2 3 E F G YR Year PE QE TEE PF QF TEF PG QG TEG 1 2 3 Year VN YR GDP Deflator Inflation Rate (%) 1 2 3( b ) Suppose the typical basket is defined as Q = (QE = 5, QF = 6, QH = 2). Calculate the cost of the typical basket (COB) and the consumer price index (CP/) using Year 1 as the base year. Then, use CPI to calculate the inflation rates from Year 1 to Year 2 and from Year 2 to Year 3. Put your results in the tables provided. E F H Year COB PE QE TEE PF QF TEE PH QH TEH 2 3 Year COB CPI Inflation Rate (%) 2 3Use a properly labeled graph to illustrate the relationships between fullemployment (or potential or natural rate of output) output YN and the boombust of business cycles. Explain how actual unemployment u, frictional unemployment up, structural unemployment us, cyclical unemployment uc, natural unemployment uN, actual output Y, and YN are related to each other throughout a business cycle. Show your step-by-step derivation with explanation related to the graph or a zero will be assigned. HUMBER COLLEGE LONGO FACULTY OF BUSINESS ECON 1500-OLB (WINTER 2023) DR. MICHAEL HO GROUP ASSIGNMENT #1 HARDCOPY DUE 1:30 PM ON FEBRUARY 24TH, 2023 CHECKLIST - YOU MUST MAKE SURE THAT The name and signature of every member who has contributed to this assignment must be listed on this cover page in the space provided below (no name and signature, no marks) and the submitted assignment contains only original work from your group. Your assignment will not be accepted unless it has this cover page. O Answer every part of each question (clearly label each part of your answer) with step-by-step demonstration on how to get the answer and type up your assignment with word-processing software (except the graphs) because hand-written assignment will not be accepted. You must coordinate with your group members to ascertain one printed copy of this assignment will be submitted in person at 1:30 pm on February 24. Late submission will not be accepted and a zero will be assigned. Group Member Name (Print Clearly) Signature (1)