Initially trade between Australia and the United States is balanced. Then, if a change in the exchange rate increases the U.S. dollar price of Australian goods, ceteris paribus, we would expect

Question

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If the U.S. dollar price of Australian goods increases, U.S. consumers will likely buy fewer Australian goods, leading to a decrease in U.S. imports from Australia. This can result in a trade deficit for the United States as it imports less from Australia while its exports to Australia may not change as much.

Initially Trade Between Australia and the United States Is Balanced