According to the ______, following a currency devaluation, the balance of trade worsens for a while before improving.
A) A-curve effect
B) J-curve effect
C) L-curve effect
D) T-curve effect

Question

Quizplus · Accepted Answer

The J-curve effect states that following a currency devaluation, the balance of trade initially worsens (due to increased inflation and higher import prices), before improving over time as exports become more competitive.

According to the ______, Following a Currency Devaluation, the Balance