A depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is
A) constant.
B) inelastic.
C) elastic.
D) unitary elastic.

Question

Quizplus · Accepted Answer

If the demand for imports is elastic, a depreciation of the dollar will lead to a relatively larger increase in the quantity of imports demanded. This is because consumers will be more responsive to changes in price and will therefore demand a relatively larger quantity of imports as the price decreases due to the depreciation of the dollar. In contrast, if the demand for imports is inelastic or constant, the impact of a depreciation of the dollar on the quantity of imports demanded will be less pronounced.

A Depreciation of the Dollar Will Have Its Most Pronounced