a)Assume that the MPC in Australia is equal to 0.75 (C₁=0.75), the marginal tax rate is 0.3 (t=0.3), and the marginal propensity to import is 0.025 (m=0.025). What would be the impact of an $80m reduction in exports on output? Use a formula in presenting your answer. (5 mark)

b)Assume that the relationship between changes in the unemployment rate and real GDP growth is described by Okun's Law as follows:

Y = 2.0238 - 0.3254X

where X represents real GDP growth and shows the changes in the unemployment rate. If GDP decreases by 3% as a result of the reduction in C, I, and NX, what would be the impact on the unemployment rate in Australia? What is the degree of correlation?Explain your answers. (5 marks)