Significant trade deficits, imports exceeding exports,
(WEEK 11):a) Significant trade deficits, imports exceeding exports, should have what effecton a country’s exchange rate? b) An importer based in Austria that imports kangaroo meat from Australiawishes to buy Australian dollars (A$) with Austrian Schilling (ATS). Thefollowing rates are quoted:In AustriaUS$ 1 = ATS 15.2650 â 15.2660In MelbourneA$ 1 = ATS 8.9750 â 8.9830In Hong KongATS 1 = A$ 0.1110 â 0.1115Determine the best Australian dollar against Austrian Schilling rate (i.e.express one unit of A$ in terms of ATS) at which one may buy Australiandollar with Austrian SchillingEvaluate at this rate the cost in Austrian Schilling of buying 5,000 kg of thepremium kangaroo meat that cost A$12 per kilo.
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