What will happen to the domestic trade balance

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Reference no: EM13151157

Assume the following to be true: Export contracts are denominated in domestic currency. Import contracts are denominated in foreign currency. Foreign exporters (the sellers of domestic imports) practice pricing to market while domestic exporters do not. What will happen to the domestic trade balance following a devaluation of the domestic currency? Explain carefully the effects during the pass-through period, and be sure to explain why these effects occur.

Reference no: EM13151157

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