Author Question: Initially trade between Australia and the United States is balanced. Then, if a change in the ... (Read 17 times)

jon_i · **on:** Apr 19, 2019

Question 1

If the exchange rate between the United States and India changes from $1 = 60 rupees to $1 = 10 rupees,
ceteris paribus

◦ the United States imports from India increase.
◦ Indian exports to the United States increase.
◦ the United States exports to India increase.
◦ the trade deficit in the United States increases.

Question 2

Initially trade between Australia and the United States is balanced. Then, if a change in the exchange rate increases the U.S. dollar price of Australian goods,
ceteris paribus, we would expect

◦ a trade deficit in the United States.
◦ a trade surplus in the United States.
◦ a trade deficit in Australia.
◦ a trade deficit in both countries.

Animal_Goddess · **Reply #1 on:** Apr 19, 2019

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