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Suppose the quality of Hong Kong products relative to foreign products deteriorates. a. Explain how the...

Suppose the quality of Hong Kong products relative to foreign products deteriorates. a. Explain how the quality deterioration of Hong Kong products affects Hong Kong’s exports at any given exchange rate. (3%) b. Explain how the quality deterioration of Hong Kong products affects Hong Kong’s real exchange rate and trade balance. (5%) c. Is it possible that the quality deterioration of Hong Kong products increases Hong Kong’s trade deficit? (2%)

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Rahul Sunny answered 2 years ago
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