How the impact of this additional change in exchange rate

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Reference no: EM1360701

Now suppose that after the $50 billion increase in exports the economy's currency appreciates relative to other currencies. People abroad have to trade more of their currency to get a unit of the economy's currency; residents of the economy trade less of their currency to get a unit of foreign currency. Because foreign goods are now relatively cheaper and domestic goods are relatively more expensive, imports increase by $60 billion and exports decrease by $30 billion. Use the green line (triangle symbols) to show the impact of this additional change in the exchange rate on the economy.

Reference no: EM1360701

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