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Explain the dynamic effect by taking "Oil Prices and Inflation" as an example?
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- Can you explain how positive and negative supply shocks affect market equilibrium in terms of price and quantity?Are there any “good” supply shocks? ExplainIs it possible for there to be inflation present in the economy and still witness a decline in a large number of goods? If so, how and why is this possible?
- Suppose that due to more stringent environmental regulation it becomes more expensive for steel production firms to operate. Also, recent technological advances in plastics has reduced the demand for steel products. Use Supply and Demand analysis to predict how these shocks will affect equilibrium price and quantity of steel. Can we say with certainty that the market price for steel will fall? Why?If the price level were to rise from 160 to 200, in what direction and by how much would the value of a dollar change?Are people worse off when the price level rises as fast as their income? Why do people often feel worse off in such circumstances.
- Changes in oil prices can affect the inflation-unemployment outcome, explain what effect changes in oil prices may have on these two variables.Let us define "peak oil" as a point in time where the quantity of oil extracted and consumed (let's just assume these are the same) reaches a maximum and then starts to decline. Based on economic theory, (in other words, I'm not asking you to predict anything specific about the oil market in the real world, just a general theory question) should we expect this period of declining production to be accompanied by high and rising prices or by low/falling prices? Give a brief explanation using graphs where appropriate.Based on economic theory, (in other words, I'm not asking you to predict anything specific about the oil market in the real world, just a general theory question) should we expect this period of declining production to be accompanied by high and rising prices or by low/falling prices? Give a brief explanation using graphs where appropriate.
- Price Assume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks charge consumers decreases, but producers are not affected. Also in year 2, the cost of lumber used to build homes decreases. Which of the following is most likely to be the equilibrium change? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The equilibrium will be at point C before the change in expectations and point B after the change b The equilibrium will be at point A before the change in expectations and point B after the change с The equilibrium will be at point A before the change in expectations and point E after the change The equilibrium will be at point E before the change in expectations and point A after the change C 8 D S QuantitySuppose gold (G) and silver (S) are substitutes for each other because both serve as hedges against inflation. Suppose also that the supplies of both are fixed in the short run (Q = 90 and Q = 300) and that the demands for gold and silver are given by the following equations: PG = 990 - Qg +0.50PS and Ps = 630 -Qs +0.50PG What the the equilibrium prices of gold and silver? The equilibrium price of gold is $ 1420 and the equlibrium price of siliver is $ 1040. (Enter your responses rounded to two decimal places.) What if a new discovery of gold doubles the quantity supplied to 180? How will this discovery affect the prices of both gold and silver? The equilibrium price of gold will be $ and the equlibrium price of siliver will be $Your senators claim that lowering prices would be good for everyone—“Who doesn’t like lower prices, after all?” They tell you they plan to lobby for deflation. Falling prices could lead to a bad situation because: