Depreciation of the dollar

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Suppose the U.S. foreign assets are 67 percent of the U.S. GDP, and the U.S. foreign liabilities are 90 percent of the U.S. GDP. Moreover, suppose that 68 percent of U.S. foreign assets are denominated in foreign currencies, while all liabilities to foreigners are denominated in U.S. dollars. Suppose that there is a 9 percent depreciation of the dollar. Will foreigners experience a net capital gain or loss? By how much (as a percent of U.S. GDP)? Show your work.

Reference no: EM131395919

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