Post Utme Bells University 2017 Economics Question 36

Practice objective / multiple choice question 36 from the 2017 Post Utme Bells University Economics examination.

Post Utme Bells University 2017 Economics Objective / Multiple Choice
Question 36 POST_UTME_BELLS_UNIVERSITY • 2017 • ECONOMICS • objective

The Marshall-Lerner condition states that if the sum of the elasticities of demand for exports and imports is greater than 1, then a devaluation of the currency will lead to an improvement in the balance of payments. Which of the following is a correct interpretation of the Marshall-Lerner condition?

Answer Options

A. A devaluation will lead to an increase in exports and a decrease in imports.
B. A devaluation will lead to a decrease in exports and an increase in imports.
Correct Answer C. A devaluation will lead to an increase in exports and an increase in imports.
D. A devaluation will lead to a decrease in exports and a decrease in imports.
Correct Answer
C
Correct Option:
A devaluation will lead to an increase in exports and an increase in imports.

About This Question

This is Post Utme Bells University 2017 Economics Question 36. It is one of the objective questions from the 2017 Post Utme Bells University Economics examination.

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