The Marshall-Lerner condition is less likely to hold when

Name: The Marshall-Lerner condition is less likely to hold when
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Question

Quizplus · Accepted Answer

The Marshall-Lerner condition, which relates to the responsiveness of trade balances to exchange rate changes, is more likely to hold when imports and exports are very price-sensitive. It does not directly relate to the size of the trade deficit or the marginal propensity to consume, making none of the provided options correct reasons for the condition to be less likely to hold.

The Marshall-Lerner Condition Is Less Likely to Hold When