5. An economy has AS = 5P, C=14+.9(Y-10-1Y), I = 10, G = 4, NX =...

 

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5. An economy has AS = 5P, C=14+.9(Y-10-1Y), I = 10, G = 4, NX = 11-.01Y-.5P. The price of oil declines. Canadian net exports decline to NX =5-.01Y-.5P a. Provide diagrams for AE, AS/AD and NX that illustrate and quantify equilibria A, B and C. b. Calculate and illustrate the increase in government spending to offset this shock and discuss "over shifting" 5. An economy has AS = 5P, C=14+.9(Y-10-1Y), I = 10, G = 4, NX = 11-.01Y-.5P. The price of oil declines. Canadian net exports decline to NX =5-.01Y-.5P a. Provide diagrams for AE, AS/AD and NX that illustrate and quantify equilibria A, B and C. b. Calculate and illustrate the increase in government spending to offset this shock and discuss "over shifting"