Provide solutions to the following

Suppose that there is a TEMPORARY INCREASE IN THE DEMAND FOR IMPORTS that exogenous {due to changes in tastes, not due to changes in the real exchange rate or disposable income] [a]. Using AA-DD diagram for a floating exchange rate system, show what happens to national income and the exchange rate as a resutt of this temporary increase in the demand for Imports. EXPLAIN what causes any curves to shift. {b}. On another AADD diagram, show how this same temporary increase in the demand for imports would impact on national income in the short run ifthere were a FIXED EXCHANGE RATE system instead. Explain what causes any curves to shift. [c] Under which regime {floating or fixed] is the impact on national income greater? Your answer must be consistent with your previous answers In this question. [d] Suppose the exogenous increse In demand for imports were PERMANENT INSTEAD. On a diagram showing how the real exchange rate is determined using relative supply and demand curves, indicate how the increase in the demand for imports affect that diagram and determines a new real exchange rate. Show AA-DD diagram what would happen to output and the exchage rate in the short mn and the long run under a floating exchange rate system as a result of the increase in the demand for import. Assume the country begins at a long run equlibrium. Assume the U.S. is a small open economy (contrary to fact) and its trading partner is Japan. The trade balance is initially zero. The nominal exchange is e=Yen/S. Suppose there is a increase in the world interest rate r*. Answer questions 34-36. [34] What happens to the U.S. net capital outflow? Explain. [35] What happens to the equilibrium net exports? Explain. [36] What happens to the real exchange rate? Explain by showing and explaining the shifts, if any, in the following curves. 6, the real exchange rate S-I NX( E) S-I units of U.S. output1. Consider a Cournot duopoly with inverse market demand of P = a - bQ. Suppose F1's costs be C1 = c191 and F2's costs are Cy = coq2, so the firms are not identical. a. Suppose the inverse market demand for lithium is P = 750 - 0.50, where Q is measured in millions of tons and P is in dollars per ton. Assume the market has two Cournot competitors, and that F1 has costs Cq = 340q, while F2 has costs C2 = 420q2 (both in dollars per ton). Use the formulae below to calculate the market price and each firm's output and profit in the lithium market. Round profits to billions of dollars. b. F2 is currently considering investing in a public opinion campaign that would shift the market demand curve to Q = 1520 - 2P but would increase fixed costs by $1.14 billion. Use the algebraic formulae below and relevant results from part b to determine whether the investment is worthwhile. Formulae for outputs and market price at Cournot equilibrium for two non-identical firms. q1* = (a - 2c1 + (2)/3b . q2* = (a - 2c2 + c1)/3b . Q* = (2a - Cj - c2)/3b . P* = (1/3)(a + (1 + (2)Part C uses the following terminology. Aggregate income, Y Disposable income Ya = Y-7, where Tis a lump sum (i.e. fixed) tax Consumption, C determined according to the consumption function C=Cx+c(Yd), where Cx is autonomous consumption and c is the marginal propensity to consume. Investment, / Government spending, G Questions At equilibrium, what is (1) the value of aggregate income (call this value ro) and (it) consumption? Provide your working