A profit maximizing global firm-facing a choice behween two countries e.g. U.S and China-is seeking your help in order to decide where to produce and where to sell. Their market research department has determined that the commodity produced will cost $100 a unit in China and $20 a unit in the U.S. Moreover, if the commodity is sold in the U.S, it can fetch a price of $40 per unit and a price of $200 if it is sold in China (See table below). Question 12): If it is believed that the Monetary authorities in China will keep the foreign exchange rate of the renminbi (Yuan) vs the dollar at e($/%)=1/5 for a considerable length of time where a) should the firm produce and b) where should it sell? Answer a): Answer b): Question 13: In a free capital flow, and non-fixed foreign exchange rate regime, countries with high levels of foreign denominated debt should be keenly aware of the potential danger of a): Inflation b) Currency devaluation c) Trade deficits d) Capiral controls e) high interest rates Question 14: A domestic recession shits the NX curve to the Thus, the trade balanee (NX) will ... - and the exchange value of the currency will a) left, worsen, strengthen b): leff, improve, weaken c): right, worsen, weaken d) i right, improve, strengthen