3.(15%) Assume the British has the following import/export volumes and prices with USA, one of the...
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3.(15%) Assume the British has the following import/export volumes and prices with USA, one of the major trading partners. The pound has experienced a 10% appreciation against the dollar in the past two years. The pre-appreciation exchange rate was 0.99/$, and the price elasticity of demand for imported goods is -0.8 for the British. Price of exports, pounds () 2.5 Price of imports, foreign currency ($) 2.7 Quantity of exports, units Quantity of imports, units 100 120 a. What is the new exchange rate after the appreciation? b.Calculate the trade balance of the British with U.S. before and after the appreciation of the pound(Assume: export prices and volumes remain constant). 4 (15%) Howard is a foreign exchange trader for a bank in 3.(15%) Assume the British has the following import/export volumes and prices with USA, one of the major trading partners. The pound has experienced a 10% appreciation against the dollar in the past two years. The pre-appreciation exchange rate was 0.99/$, and the price elasticity of demand for imported goods is -0.8 for the British. Price of exports, pounds () 2.5 Price of imports, foreign currency ($) 2.7 Quantity of exports, units Quantity of imports, units 100 120 a. What is the new exchange rate after the appreciation? b.Calculate the trade balance of the British with U.S. before and after the appreciation of the pound(Assume: export prices and volumes remain constant). 4 (15%) Howard is a foreign exchange trader for a bank in
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