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Assume the United States has the following import/export volumes and prices. It undertakes a major devaluation of the dollar, say 18% on average against all
Assume the United States has the following import/export volumes and prices. It undertakes a major "devaluation" of the dollar, say 18% on average against all major trading partner currencies. What is the pre-devaluation and post-devaluation trade balance? Assumptions Initial spot exchange rate, $/fc Price of exports, dollars ($) Price of imports, foreign currency (fe) Quantity of exports, units Quantity of imports, units Percentage devaluation of the dollar Price elasticity of demand, imports Values 2.00 20.0000 12.0000 100 120 18.00% (0.900)
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