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Suppose 30 % of home trade is with country 1 and 70 % is with country 2; Homes currency depreciates 20 % against country A
Suppose 30 % of home trade is with country 1 and 70 % is with country 2; Homes currency depreciates 20 % against country A but appreciates 25 % against country B. What is the change of effective exchange rate for home country? Please explain with steps so I can understand this homework question.
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