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Assume the country of Eritrea ties its currency (the Nakfa-ERN) to the dollar and the exchange rate will remain fixed. Eritrea has frequent trade with
Assume the country of Eritrea ties its currency (the Nakfa-ERN) to the dollar and the exchange rate will remain fixed. Eritrea has frequent trade with countries in the eurozone and the United States. All traded products can easily be produced by all the countries, and the demand for these products in any country is very sensitive to the price because consumers can shift to wherever the products are relatively cheap. Assume that the euro depreciates substantially against the dollar during the next year. What is the likely effect (if any) of the euro's exchange rate movement on the volume of Eretrea's exports to the eurozone? will decline will increase will remain more or less the same Cannot be determined
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