A) You are the Head of Treasury of your country. Assume the country initially starts out at full-employment output. However, the country's major export sector is experiencing considerably lower prices on the world market, so exports drop dramatically. Graph the initial situation and the situation after the export shock.

B)The CBA government implements a carbon permit scheme to reduce the CBA contribution to global warming. This tax raises the cost of generating electricity through coal (the major form of electricity generation in CBA) by 10%.

(i)What impact would we expect this cost increase to have on the CBA economy?Show on an AD-AS diagram.

(ii)What impact would we expect this cost increase to have on CBA companies that export primary commodities such as iron and copper?These companies are large users of coal-generated electricity.

(iii)What impact would we expect this cost increase to have on the CBA utilities that generate electricity for CBA households and industries?Explain your reasoning carefully.