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Suppose that the only assets in the world are shares of the Japanese car maker Honda and Australian government bonds. At the beginning of 2
Suppose that the only assets in the world are shares of the Japanese car maker Honda and Australian government bonds.
At the beginning of
Australia held shares of the Japanese car company Honda, denominated in Japanese yen, while
the rest of the world held units of bonds denominated in Australian dollars, issued by the Australian government.
Assume that throughout the exchange rate was yen per AUD, Honda shares were priced at yen each, and Australian government bonds priced at AUD per unit. If during Australia increased its holdings to Honda shares and Australias current account balance for was AUD, then how many units of Australian government bonds are held by the rest of the world at the end of
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