When the United States is moving downward along the J-curve,its trade balance is ______________ as an immediate after-effect of a____________________ of the dollar.

Question

Quizplus · Accepted Answer

When the United States is moving downward along the J-curve, it means that in the short-term, the demand for US goods and services is inelastic, and the supply of foreign goods and services is also inelastic. Therefore, a depreciation of the dollar, which makes US goods cheaper and foreign goods more expensive, leads to an increase in demand for foreign goods and a decrease in demand for US goods. This leads to a worsening of the trade balance.

When the United States Is Moving Downward Along the J-Curve,its