Company A is evaluating an offshore investment in renewable energy to pay for its CO2-e emissions and sell the remainder (RECs) to the Australian market. The questions in this exam will present the theories and characteristics for this investment in RECs.

Assuming that Company A will generate 3M RECs in the offshore operation. Considering that the company's own consumption is 300,000 RECs/a will be used for the operation in Australia, 2,7MRECs/a will remain to be sold in the Australian market.

Question 6 - Macroeconomic Analysis

Scenario analysis (foreign stagflation & foreign government and central bank response)

Consider a possible future stagflation in the foreign country - the foreign government intervenes and increases taxes on foreign owned businesses to subsidize government spending to increase employment and the central bank increases interest rates to reduce inflation - assume interest rates change nominal exchange rate.

b - Draw a macroeconomic graph reflecting the shifts in ASAD and money supply/demand curves. Explain what might happen to the output for your business and profitability of your business using a mix of ASAD and ATC/MC/MR and other relevant graphs.