The questions involve you interpreting the model output within your answers.

In this case, the model output consists of the following indicators;

• The original and new trade balance (£)
• The new level of exports and imports (£)
• The percentage growth rates of imports and exports (%)

Your discussion should focus on using the old and new trade balance to support the theoretical implications of your discussion. For instance, you may argue that theoretically the trade balance will shift from a deficit to a surplus if the exchange rate depreciates, assuming that the Marshall-Lerner condition holds. The simulation can be used to test this expectation.

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