Consider an economy (with no government) where:

X0= 6000

M = 300+0.3Y

Y* = 25,000

a.Draw a net exports graphdemonstrating the export and import functions.Include the intercept and slope for both functions.

b.Calculate the trade surplus/deficit, and show where the equilibrium point belongs on your graph from (a).

c.If the central bank lowers bank rates, would we expect their NX increase or decrease? Demonstrate this change on your NX graph from (a).