Empirical research suggests that the U.S.price elasticities of demand for imports and exports are very inelastic, suggesting that currency depreciation would result in a worsening of it's balance of trade.

Question

Quizplus · Accepted Answer

Empirical research on the price elasticities of demand for imports and exports in the U.S. often finds that these elasticities can vary, but there is not a consensus that they are very inelastic. Additionally, currency depreciation can lead to an improvement in a country's balance of trade if the Marshall-Lerner condition is met, which requires the sum of the absolute values of the price elasticity of demand for imports and exports to be greater than one.

Empirical Research Suggests That the U