Question 2 (25%) a. Discuss the main channels through which interest rates affect the market for owner-occupied houses and how the prices of owner-occupied houses will be affected in the short and long term if interest rates increase in 2022. (10) b. Discuss whether during the coronavirus crisis in 2020 there were any movements of the demand curve and/or the new supply curve in the Cyprus residential real estate market. Specifically, explain in which direction the demand curve and/or the new supply curve for residential real estate must have moved and what specific factors may have caused such a move or movements. (6) c. What is the short-term and long-term effect on residential real estate prices of the demand curve and/or new supply movements that you discussed in (b). (5) d. According to a recent study, the elasticity of the supply of residential real estate in Nicosia is 1.4 and in Limassol 1.9. If we assume that in 2022 the demand for residential real estate will increase by 8% in both cities and that the supply will remain stable in both cities, how will the prices of residential real estate in both cities be affected. Will they be affected in the same way or differently? If they are affected differently, explain how the effect on prices will differ in the two cities and why. (4)