Question

(a) What is net export function? How is it related to equilibrium GDP ? How do foreign

GDP and relative international prices affect the net export function?

(b) What are aggregate supply shocks? How do they affect the price level and real GDP?​

Answer 1

Explanation:

Thus, a higher domestic price level, relative to price levels in other countries, will reduce net export expenditures. Truth be told, among economists.

Answer 2

Explanation:

a)The net export function is one that defines the difference between the exports and imports of a country and it is also used to calculate the GDP of any country. It is also effected by foreign GDP and relative international prices, because when international prices change in such a manner that exports become expensive, then net export function will see a drop also

b) An aggregate supply shock is related to sudden infalation or change in county's output. These shocks put a negative effect on the real GDP and increase prices