Assume that Macdeonia has the following import/export volumes and prices. As it runs a trade deficit, it undertakes major "devaluation" of its currency, say 30% on average against its all major trading partners currencies. What are Macedonia's trade balances during the pre-devaluation period, the post-devaluation - immediately after devaluation period, and the post-devaluation quantity adjustment period, respectively?

Fc = foreign currency

Initial spot exchange rate ($/fc) = $3.00/FC

Price of exports, dollars = $25.00 per unit

Price of imports, FC = fc15.00 per unit

Quantity of exports, units = 100 units

Quantity of imports, units = 120

Percentage devaluation of the dollar = -30%

Price elasticity of demand for imports = -0.85

a) What is the pre-devaluation trade balance?

b) What is the trade balance immediately after devaluation ? (The New exchange rate)

c) What is the trade balance during the post-devaluation - quantity adjustment period? (new imports)