Question 5 Not yet answered Marked out of 0.35 Flag question Assume Australia has the...
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Question 5 Not yet answered Marked out of 0.35 Flag question Assume Australia has the following contracted import/export volumes and prices and has adopted a pegged exchange system: Price of exports: 50 AUD Price of imports: 35 foreign currency (FC) Quantity of exports: 100 units Quantity of imports: 115 units Due to some excess pressure on Australian dollar (AUD), Reserve Bank of Australia(RBA) decides to undertake a significant "devaluation" of AUD, say 20% on average against all major trading partners' foreign currencies(FC). If the initial spot exchange rate before devaluation is AUD1.6/FC, Australia's trade balance(revenue from export-revenue from import) for the two pre and post devaluation periods are: Pre-devaluation trade balance is AUD in Immediately after devaluation, trade balance is AUD in Drouiouc nan Moyt nan
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