For the Writing Assignment, you need to read the article: “Housing Market is Waking up to a New Hangover” by Diana Olick, published on October 2014 by USA Today. The article is posted on Titanium and can be downloaded from the following link: http://www.usatoday.com/story/money/business/2014/… The article illustrates a number of economic concepts we have discussed in class. You should write a short narrative essay that analyzes the article using the tools developed in class. Below is a guideline on how the essay should be structured:
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California State University, Fullerton
Department of Economics
Professor Nasser Duella,Ph.D
Economics 201
Writing Assignment
First Draft: NOT MANDATORY: October 7
Final Draft: MANDATORY: December 2
For the Writing Assignment, you need to read the article: “Housing Market is Waking up to a New Hangover”
by Diana Olick, published on October 2014 by USA Today. The article is posted on Titanium and can be
downloaded from the following link: http://www.usatoday.com/story/money/business/2014/10/26/cnbc-
housing-hangover/17772977/
The article illustrates a number of economic concepts we have discussed in class. You should write a short
narrative essay that analyzes the article using the tools developed in class. Below is a guideline on how the essay
should be structured:
Format
1. The essay should NOT exceed 3-double spaced pages, including graphs. Shorter essays are welcomed.
2. Use 12 point font, and 1-inch margins.
3. A SEPARATE cover page (in addition to the 3-pages) should be provided. The cover page should have your
name, semester, and class section. DO NOT include your name on the remaining pages.
4. You DO NOT need a “reference” page unless you use resources outside this article. This is not a research
essay so the above article should be your primary source, but you may choose to reference your text, lecture
notes, or other articles. If so, you need to cite the references at the end of your essay.
5. STAPLE your essay. DO NOT bind the pages or place them in folders, etc.
6. I deduct points if these rules are not followed. Details are important!!
Content
Your essay SHOULD address ALL points/questions below and include 3 graphs
1. In the first paragraph introduce your essay, say what you are going to discuss, and reference the article.
2. In the following separate paragraph(s) summarize the main points of the article.
3. In one passage the article reads: “Investors, desperate for yield and fueled by Fed-induced cheap cash,
swarmed the most distressed housing markets, buying bargain-basement properties and turning them into
rentals.” Discuss this passage by addressing the following points and provide an analysis (in an essay
form):
a. Using an S-D graph (on a market for housing), show how “investors buying properties” impact the
housing market. Does any of the curves (Demand or Supply for homes) shift in this case? Why?
Please explain clearly.
b. What happens to equilibrium price and quantity of homes when “investors buy properties”? Why?
c. What happens to consumer and producer surplus in the housing market when “investors buy
properties”? Explain why. Be specific.
4. In another passage the article reads: “Foreclosures have fallen to new lows since the crisis…” Discuss this
passage by addressing the following points and provide an analysis (in an essay form):
a. Using an S-D graph (on a market for housing), show how a decline in foreclosures has impacted
the housing market. Does any of the curves (Demand or Supply for homes) shift (because
foreclosures decline)? Why? Please explain clearly.
b. What happens to equilibrium price and quantity of homes due to the decline in foreclosures. Why?
c. What happens to consumer and producer surplus in the housing market because of “a decline in
foreclosures”? Explain why. Be specific.
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5. In another passage the article reads: “Prices soared again between 2011 and 2013 due to the Federal
Reserve’s intervention; it bought billions of dollars worth of mortgage-backed bonds and pushed the
average rate on the 30-year fixed to a record low.” Discuss this passage by addressing the following points
and provide an analysis (in an essay form):
a. Using an S-D graph (on a market for housing), show how Federal Reserve policy to buy mortgagebacked securities (which lowers mortgage rates) impacts the housing market. Does any of the curves
(Demand or Supply for homes) shift? Why? Please explain clearly.
b. What happens to equilibrium price and quantity of homes because of the Federal Reserve policy?
Why?
c. What happens to consumer and producer surplus in the housing market because of Federal Reserve
policy? Explain why. Be specific.
6. Based on your understanding of elasticity, which of the market do you think has a higher elasticity of
demand: buying a house/apartment or renting a house/apartment? Provide a brief explanation on your essay
(a short paragraph will suffice).
7. Write your conclusions in one last paragraph.
Grading and Other Considerations
1. Your paper will be graded based on the following criteria:
a. The quality of your writing (separate from the quality of your analysis).
b. Grammar, spelling, sentence structure.
c. The quality and depth of your analysis,
d. Your demonstrated ability to relate and apply the materials discussed in class to the news story
2. The DEADLINE to submit the paper is December 2. If you would like to get feedback and a chance to
revise your paper, you may turn in a first draft on October 7 at the latest, allowing time for
review/revisions.
3. The paper is graded out of 100 points and is worth 15% of your grade
4. NO LATE PAPERS WILL BE ACCEPTED.
5. The quality of the paper matters, not quantity. Please make sure that your sentences are complete, coherent
and grammatically correct.
6. You need to hand me A HARD COPY of the paper. Electronic submissions are NOT ACCEPTED.
7. Make sure that you do YOUR OWN WORK and use YOUR OWN words when developing the essay. You
should by no means copy somebody else’s paper – either your classmate’s paper, or the papers that you use
as a source of information. Copying violates the university honor system, and will be punished accordingly.
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