Question: We have two countries, China and Namibia, with a fixed exchange rate trading at 1 yuan = 20 Namibian dollars (N$). Last year, China. bought

We have two countries, China and Namibia, with a fixed exchange rate trading at 1 yuan = 20 Namibian dollars (N$). Last year, China. bought 200 billion N$ worth of goods, services and financial assets from Namibia, while Namibia bought 5 billion yuan from the China. (4pts):

a)What is the value of the Chinese balance of payments deficit?

b)What is the value of the Namibian balance of payments surplus?

c) What will both the Chinese and Namibian governments do in response (keeping in mind there is a fixed exchange rate system in both countries)?

d) What effect will this have on domestic prices in China and Namibia?

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