D ' Question 35 l Refer to the graph below. Suppose that the world supply curve is SW1. What is the balance of trade and what is causing this particular balance of trade? 0 the trade balance is in equilibrium. 0 there is a trade surplus and this is because there was an appreciation of the currency in the foreign exchange market. 0 there is a trade decit because world prices are below domestic equilibrium prices. which causes domestic Domestic supply of goods Swo Domestic demand of goods demand of goods to be greater than domestic supply of goods. 0 there is a trade decit because the domestic currency is undervalued relative to other world currencies. This leads to a world price level that is lower than the domestic equilibrium price. This causes domestic demand of goods to be greater than domestic supply of goods. 2.18 pts