16.1 Write a two-equation system in "supply and demand form," that is, with the same variable y (typically, "quantity") appearing on the left-hand side: + y =a2y2 B222 +2. (i) If a = 0 or a = 0, explain why a reduced form exists for y. (Remember, a reduced form expresses y, as a linear function of the exogenous variables and the structural errors.) If a = 0 and a = 0, find the reduced form for y2.

(ii) If a 0, , 0, and

a, a,, find the reduced form for y. Does y, have a reduced form in this case? ples? Explain. (iii) Is the condition

a, a, likely to be met in supply and R