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"The Trade Balance and the Exchange Rate" icon

The Trade Balance and the Exchange Rate

The objective of this simulation is to investigate how the exchange rate will influence the trade balance (exports minus imports) on the Balance of Payments. The input variables include the price elasticity of demand for imports and exports, the original quantity of imports and exports and the change in the exchange rate. The output area includes the original and new trade balance, and the new level of exports and imports. Also included are background information and discussion questions.


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