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Trade Deficits and J-Curve Adjustment Paths. Assume the United States has the following imprt/export volumes and prices. It undertakes a major devaluation of the dollar,

Trade Deficits and J-Curve Adjustment Paths. Assume the United States has the following imprt/export volumes and prices. It undertakes a major "devaluation" of the dollar, say 18% of average against all major trading partner currencies. What is the pre-devaluation and post-devaluation trade balance?

Initial spot excahnge rate ($/fc) 2.0

Price of exports, dollars ($) 20.00

Price of imports, foreign currency (fc) 12.0000

Quantity of exports, units 100

Quantity of imports, units 120

Percentage devalaution of the dollar 18.00%

Price elasticity of demand, imports -0.90

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