Pre-devaluation and post-devaluation trade balance

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Assume that the United Arab Emirates has the following import/export volumes and prices. It undertakes a major "devaluation" of the UAE Dirham (AED) by 6% on average against all major trading partner currencies. What is the pre-devaluation and post-devaluation trade balance?

Initial cross exchange rate, AED/€ = 4.2

Price of exports, (AED) = 100 billion

Price of imports, (€) = 112 billion

Quantity of exports, units = 300

Quantity of imports, units = 200

Percentage devaluation of the AED = 6%

Price elasticity of demand, imports = -0.85

Reference no: EM132346994

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