Pegged Currency and International Trade Assume the Hong Kong dollar (HK$) value is tied to the U.S. dollar and will remain tied to the U.S. dollar.

Last month, a HK$ = 0.25 Singapore dollars. Today, a HK$ = 0.30 Singapore dollars. Assume that there is much trade in the computer industry among Singapore, Hong Kong, and the United States and that all products are viewed as substitutes for each other and are of about the same quality. Assume that the firms invoice their products in their local currency and do not change their prices.

a. Will the computer exports from the United States to Hong Kong increase, decrease, or remain the same? Briefly explain.

b. Will the computer exports from Singapore to the United States increase, decrease, or remain the same?

Briefly explain.