The shorter the currency pass-through period, the _______ required for currency depreciation to have the intended effect on the trade balance.

Question

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A shorter currency pass-through period means that changes in the exchange rate have a more immediate effect on the prices of imported and exported goods. Therefore, a currency depreciation will have a quicker impact on the trade balance, requiring a shorter time period for the intended effect.

The Shorter the Currency Pass-Through Period, the _______ Required for Currency