National currency of a country Z is devaluated by 25%. The coefficient of price elasticity of exports demand (EX) is estimated as 0.4, the coefficient of price elasticity of imports demand (EM) is supposed to equal 0.2. Find whether the devaluation will improve the trade balance of the country.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter21: International Trade And Finance
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A6 National currency of a country Z is devaluated by 25%. The coefficient of price elasticity of exports demand (EX) is estimated as 0.4, the coefficient of price elasticity of imports demand (EM) is supposed to equal 0.2. Find whether the devaluation will improve the trade balance of the country.
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