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ECON 2020 D01: MACROECONOMIC THEORY WRITTEN ASSIGNMENT Instructor: Gift E. Festus Instruction: Question 1 is compulsory . Then, answer any other 2 questions . Total number of questions to be attempted is 3 questions in all. Please pay attention to the hints and I advise you to patiently watch the videos. Y ou will fi nd the answers there if you do. This should not be a hard work. Students are to submit via UMLEARN. Hard Due Date : 3:00pm on Sunday. All answers must be clear and hand written. Any non – handwritten work will be graded zero. You do not need references for this assignment. Q1: There are two equations for ma croeconomic equilibrium in an economy. State the m. Show (mathe matically ) that Savings equals Investment when expenditure equals income . What type of economy would you have when exports equal imports? What happ ens to the savings -investment relationship if exports are not equal to imports ? [This can be greater than or less than ]. [Hint: See video lecture on Open Economy Macroeconomics ]. Note : Ensure to write out full meanings when you use abbre viations or short forms. This is key to getting full marks . Weight: 40 % Q2: Write down demand and supply equations fo r smartphones, include two exogenous variables in eac h equation . [Hint: Chapter 1 in the lecture slides ] b. Draw a supply –demand graph for smartphones an d identify the equilibrium price and quantity. [Hint: Chapter 1 in the lecture slides ] c. Use your graph to show how a change in one of you r exogenous variables affects the model’s endogenou s variable s. [Hint: Chapter 1 in the lecture slides] Weight: 30% General Hint: The Demand and supply equations do not change . Include both objective and subjective fact ors. You will only need to think smart here. Q3: Define the concept Monetary Policy . The Bank of Canad a creates deposit through a system where banks deposit a fra ction of their depos its with the central bank. Can you mention and define this term ? b. Su ppose Christian depos its $ 250 in Scotiabank. Given that the RRR stated by the Bank of Canada for all commercial banks is 20%, what is the total amount created in th e economy due to Christ ian ’s deposit ? What is the amo unt of new money cre ated? c. Assume that RRR is 10%, by how much d oes the total amount created in th e economy due to Christ ian ’s deposit cha nge? What is the amo unt of new money cre ated in this case ? [Hint : See the lecture video on Money ]. Weight: 30% Q4: Show th at the equation of exchange and the quantity theory of m oney have same resu lts. After this, mention some similarities and diff erence s bet ween these two. What type of relationship exists between K and V in the models above ? [See lecture video on Inflation ] Weight: 30% Q5: Use the table below t o answer the following questions. Suppose that the qua ntiti es of oranges and apples demanded through the years is 2 33 and 234 respectively . You r answer must be presented in a table format. [See lecture notes on the D ata on M acroe conomics ]. Year Price of Oranges Price of Apples 2011 12.3 13.2 2012 11.2 12.1 2013 14.1 11.4 2014 18.3 17.9 2015 20.2 23.1 For each year, i. How many goods are in the market basket? ii. The CPI ( using 2011 as the base year ) iii. The inflation rate fr om the preceding year Weight: 30%