The assignment talks about Effect of COVID – 19 on Canadian Economy. Also, there is a description of Solving Statistics Problems. So, what is the intuition behind the income and substitution effects that you have found?
Effect of COVID – 19 on Canadian Economy – Solving Statistics Problems
Firstly, consider a variant of the twoperiod model of consumptionsaving behavior. In this version of the model, the consumer has income y in the first period and no income in the second period. Her lifetime budget constraint is. Secondly, draw this budget constraint in a diagram with c on horizontal axis and c’ on vertical axis. Also, what are the slope and vertical intercept of this budget constraint? Label the endowment point in the diagram. Thirdly, suppose the consumer faces the above budget constraint and has regular, convex indifference curves. If the interest rate increases, show in a diagram how her equilibrium will change. In the same diagram, decompose the overall effect on c’ into income and substitution effects. (3 points)
Effect of COVID – 19 on Canadian Economy – Solving Statistics Problems
Suppose the consumer faces the above budget constraint and has Lshaped indifference curves. She prefers to have the same consumption in the two periods. If the interest rate increases, show in a diagram how her equilibrium will change. In the same diagram, decompose the overall effect on c’ into income and substitution effects. What is the intuition behind the income and substitution effects that you have found? The Coronavirus pandemic is likely to affect the Canadian economy in a number of ways. For this problem, assume that it has the following three effects on the Canadian economy: 1) Autonomous consumption and investment decrease; 2) the world interest rate decreases; and 3) there is a temporary decline in productivity.
Effect of COVID – 19 on Canadian Economy – Solving Statistics Problems
Use the smallopeneconomy monetary intertemporal model to study the effects of these shocks on the Canadian economy, which has a flexible exchange rate. Assume that the demandside shock to consumption and investment is larger than the supplyside shock due to lower productivity. Also assume that the drop in the world interest rate is greater than the drop implied by the initial shifts in the outputdemand and outputsupply curves. Draw all five interconnected diagrams and provide a brief explanation for changes in each diagram.
Detailed Instructions

Do you need Assignment help from intelwriters.us?
intelwriters.us is one of the best essay help websites on the internet
Kindly click the link below to order quality essays from qualified assignment help experts
We offer well written, referenced and plagiarism free papers .