More comments on Homework #3

Here are a few things to think about.

Problem 6. Use the market for loanable funds. The first figure is on p. 276. The supply curve is "Savings" and the demand curve is "Investment". In this problem there are two things going on. Figure how how each affect either investment demand or savings supply. Be sure to discuss how the equilibrium changes. Also, remember: when supply and demand both change, one of the variables (price or quantity) changes clearly, the other uncertain.

Problem 2. Part A is a typical price floor. Make note of what happens to the number of workers hired under this price floor. This directly impacts the "non-union" market in B. The non-union market has wages set at equilibrium. You should see how this equilibrium changes because of what happens in the union market. (Hint: If people are unemployed in the union market, where do they look for jobs?)

Problem 5. See your notes or the discussion primarily on p. 273. Hint: What did we call (T - G)? Figure that out then you can figure out G and then C.