Consider a world comprising only 4 countries: The U.S., Great Britain, Mexico, and Canada. Table 1 displays the values of trade between the U.S. and each of the three other countries in year 2. Table 1: Trade Values in Year 2 US$ billions Great Britain 25 Mexico 45 Canada 30 Table 2 shows prices of 1 unit of the currencies of the same countries in U.S. dollars at the beginning and end of year 2. Table 2: Exchange Rates Movements in Year 2 January 1 December 31 Great Britain 1.35000 1.39995 Mexico 0.050 0.049 Canada 0.80 0.79 Calculate the change in the U.S. dollar effective exchange rate over the course year 2. (15 points) Given your answer to part (i), what happens to the U.S. trade balance between year 1 and year 2, holding everything else constant? Does it increase, decrease or stay the same? (5 points) What does the change in the effective exchange rate imply for the ability of U.S. residents to invest abroad? (5 points)