Questions:

a.In 2020, country B suffers from a 2% depreciation due to Covid-19. If this depreciation

leads to 3% increase in exports and 2% decline in imports, based on the Marshall-Lerner

conditions, by how much does the trade balance change (in percentage)?

b.In 2015, country B was also suffering from a trade deficit. How could depreciation and

fiscal policy solve this problem without "overheating" the economy? Explain and illustrate

using the graph for open economy goods market equilibrium and the trade balance!

c.In 2022, countries worldwide begin recovering from Covid-19, and this has increased

foreign demandfor vibranium, a strong metal that is native to country B. Explain and

illustrate using using the graph for open economy goods market equilibrium and the trade

balance!