The _____ effect explains that,after a depreciation of a nation's currency,the trade balance will worsen for a period of time and then improve.
A)J-curve
B)absorption
C)pass-through
D)Marshall-Lerner

Question

Quizplus · Accepted Answer

The J-curve effect is a phenomenon explained in international trade where, after a currency depreciation, the trade balance worsens initially and then improves over time. This is because in the short term, the prices of exports and imports do not change much, so the trade balance may worsen due to higher import costs, but in the long run, as exporters become more competitive, and the prices adjust, the trade balance can improve.

The _____ Effect Explains That,after a Depreciation of a Nation's