a. using the ZZ/Y and NX graphs, illustrate graphically and explain what effect a reduction in taxes will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibrium.
b. using the ZZ/Y and NX graphs, illustrate graphically and explain what effect a reduction in foreign output (Y*) will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibrium.
c. suppose the national output in the US is below the policy makers' desired level of output and is experiencing a trade deficit. Assume that the policy makers' goals are to achieve the desired level of output (i.e., full employment out) and balanced trade. Given this information, what type of exchange rate and/or fiscal policy can be used to achieve simultaneously these two goals?
d. using the YY/ NX graphs, illustrate graphically and explain what effect an increase in government spending will have on output, exports, and net export. clearly label all curves and clearly label the initial and final equilibria.