The notion that,following a devaluation,the BOT falls for a while before increasing is called a ________ effect.
A)relative price
B)elasticity
C)J-curve
D)pass-through

Question

Quizplus · Accepted Answer

The J-curve effect refers to the initial decrease in the balance of trade following a devaluation, followed by a subsequent increase once the price adjustments have had time to take effect. The curve described by these changes in trade balance over time resembles the letter "J." Therefore, the correct answer is C.

The Notion That,following a Devaluation,the BOT Falls for a While