According to the Marshall-Lerner condition, currency depreciation would have a negative effect on a country's trade balance if the elasticity of demand for its exports plus the elasticity of demand for its imports equals
A) 0.5.
B) 1.0.
C) 1.5.
D) 2.0.

Question

Quizplus · Accepted Answer

The Marshall-Lerner condition states that currency depreciation will worsen the trade balance if the sum of the absolute values of the price elasticities of demand for exports and imports is less than one.

According to the Marshall-Lerner Condition, Currency Depreciation Would Have a Negative