Question
If the exchange rate of some economy depreciates
vis−a−vis US $ and if the Marshal Lerner condition is satisfied, then the current account deficit of that economy is expected toSolution
Marshall−Lerner condition ensures that devaluation improves a country’s balance of trade position if the sum of the price elasticities of demand for exports and imports (in absolute value) is greater than 1. Assuming that this condition is being fulfilled, then depreciation in exchange rate will decrease the current account deficit.
 In the following questions, two columns are given, Column 1 and Column 2. Each column contains 3 phrases. Match the phrases in Column 1 with the phra...
Directions: Choose the combination that completes the sentences.
Choose the combination that completes the sentence.
Column (1)
In the following question, two columns are given, containing three phrases each. A phrase from the first column may or may not connect with a phrase fr...
Match Column I and Column II and choose the correct match from the given choice
In the following questions, you will find two columns containing three sentences each. Column 1 consists of sentences A, B, and C, with one blank in on...
Match Column I and Column II and choose the correct match from the given choice
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