Assume that the economy of Nicoland has a flourishing trade relationship with many nations, including the United States and an active public sector. Nicoland's economy is currently operating below the full employment level of output and trade has decreased between the two nations.

1. Explain the impact of the problems in Nicoland's economy on the United States economy, using aggregate demand aggregate supply analysis.
2. If Congress wants to repair the effects on the United States economy noted in (A) above, identify what fiscal policy action it would undertake.
3. Draw a correctly labeled AD/AS graph showing the impact of Congressional action on each of the following:
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The monthly demand equation for an electric utility company is estimated to be p equals 60 minus left parenthesis 10 superscript negative 5 baseline right parenthesis x, where p is measured in dollars and x is measured in thousands of killowatt-hours. the utility has fixed costs of $3 comma 000 comma 000 per month and variable costs of $32 per 1000 kilowatt-hours of electricity generated, so the cost function is upper c left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 32 x. (a) find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (b) suppose that the rising fuel costs increase the utility's variable costs from $32 to $38, so its new cost function is upper c 1 left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 38 x. should the utility pass all this increase of $6 per thousand kilowatt-hours on to the consumers?