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c) (10) You friend works for a company that's in the same industry. She tells you that net exports are very highly correlated with their
c) (10) You friend works for a company that's in the same industry. She tells you that net exports are very highly correlated with their sales, and that they will probably affect your sales too. Based on her advice, you decide to include net exports in your presentation from part b). One of your bosses looks over your shoulder and they ask you why you are looking at interest rates on FRED, because obviously net exports don't depend on interest rates. Your boss took principles of econ when they were a high school student in 1990. They remember that there wasn't a strong empirical link between net exports and interest rates when they worked with this data way back. In econ 4396 language, they want you to write net exports as NX = NX = erogenous instead of writing it as NX = NX - I * R. In 1-3 sentences (each part): i. (3) Explain to your boss why looking at old data may not be too informative in this case. Make a short argument about why interest rates affect net exports and why the reduced form model should be NX = NX-x*R and not NX = NX. Your answer should be written for a non-economist, and you should use work appropriate language. There are many possible answers here, you just need talk about one
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