Currency Effect on Trade Review

Sal reviews the hypothetical global trade scenario from the last video in detail for about the first six minutes, changing a few numbers to make for a cleaner example. He continues the scenario to demonstrate how the natural ups and downs of currency value (based on supply and demand) will eventually balance to the point where both countries are importing and exporting the same value. Of course, this perfect-world hypothetical isn't something Sal suggests is happening, and he hints at government intervention in a floating exchange rate, making this an impossible notion.