Calculate in dollar terms

Reference no: EM13887671

Assume the United States exports 1,000 computers costing $3,000 each and imports 150 UK autos at a price of £10,000 each. Assume that the dollar/pound exchange rate is $2 per pound.

Calculate in dollar terms, the U.S. export receipts, import payments, and trade balance prior to a depreciation of the dollar's exchange value.
Suppose the dollar's exchange value depreciates by 10 percent. Assuming that the price elasticity of demand for U.S. exports equals 3.0 and the price elasticity of demand for U.S. imports equals 2.0, does the dollar depreciation improve or worsen the U.S. trade balance? Why?
Now assume that the price elasticity of demand for U.S. exports equals 0.3 and the price elasticity of demand for U.S. imports equals 0.2. Does this change the outcome? Why?

Reference no: EM13887671

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