Question: Let’s considered a simplified “world”: suppose there are just two countries (A and B). In each country, there is a domestic automotive industry. The automobiles made in either country can be exported to the other country. To simplify the description, let’s call the currency of country A the “dollar” and the currency of county B the “pound.” In order to finance increased spending in country A, country A’s government is borrowing large sums of money from banks in country B. What effect does this borrowing have on (i) the exchange rate of dollars to pounds, (ii) the automobile manufacturers in each country, and (iii) the automobile buyers/consumers in each country. Remember! The quality of your answer is very important so you should support your statements as best you can.