Trade Deficits andJ-Curve Adjustment Paths. Assume the United States has the followingimport/export

volumes and prices. It undertakes a major"devaluation" of thedollar, say 20% on average against all major trading

partner currencies. What is thepre-devaluation andpost-devaluation tradebalance?

Initial spot exchange rate, $/fc

1.92

Price of exports, dollars ($)

20.6700

Price of imports, foreign currency (fc)

12.9900

Quantity of exports, units

130

Quantity of imports, units

150

Percentage devaluation of the dollar

20.00

What is thepre-devaluation tradebalance?

The revenues from exports are $

nothing

. (Round to the nearestcent.)

The expenditures on imports in foreign currency are fc

nothing

. (Round to two decimalplaces.)

The expenditures on imports in U.S. dollars are $

nothing

. (Round to the nearestcent.)

Calculate thepre-devaluation trade balancebelow:(Round U.S. dollar values to the nearest cent and round foreign currency to two decimalplaces.)

Pre-devaluation trade balance

Revenues from exports, U.S. dollars

$

Expenditures on imports, foreign currency

fc

Expenditures on imports, U.S. dollars

$

Pre-devaluation trade balance

$

The new spot exchange rate after devaluation is $

nothing

/fc. (Round to four decimalplaces.)

The new expenditures on imports in U.S. dollars are $

nothing

. (Round to the nearestcent.)

Calculate thepost-devaluation trade balancebelow:(Round U.S. dollar values to the nearest cent and round foreign currency to two decimalplaces.)

Post-devaluation trade balance

Revenues from exports, U.S. dollars

$

Expenditures on imports, foreign currency

fc

Expenditures on imports, U.S. dollars

$

Post-devaluation trade balance

$