When increase in the domestic price of an imported commodity is less than the depreciation of the domestic currency it is commonly referred to as
A) a Marshall-Lerner adjustment
B) a purchasing power parity adjustment
C) a currency pass-through
D) a J-curve effect

Question

Quizplus · Accepted Answer

This phenomenon is known as currency pass-through, where the depreciation of the domestic currency does not translate into an equivalent increase in the price of imported goods. This can occur due to various factors such as competition, contracts, and long-term relationships between importers and exporters. The other options are not appropriate as they refer to different concepts in international finance.

When Increase in the Domestic Price of an Imported Commodity