Post Utme Christopher University 2019 Economics Question 21

Practice objective / multiple choice question 21 from the 2019 Post Utme Christopher University Economics examination.

Post Utme Christopher University 2019 Economics Objective / Multiple Choice
Question 21 POST_UTME_CHRISTOPHER_UNIVERSITY • 2019 • ECONOMICS • objective

The Marshall-Lerner condition states that if the sum of the elasticities of demand for exports and supply of 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 statements is a correct interpretation of the Marshall-Lerner condition?

Answer Options

A. A devaluation of the currency will lead to a decrease in imports and an increase in exports.
B. A devaluation of the currency will lead to an increase in imports and a decrease in exports.
Correct Answer C. A devaluation of the currency will lead to an improvement in the balance of payments if the sum of the elasticities of demand for exports and supply of imports is greater than 1.
D. A devaluation of the currency will lead to a decrease in exports and an increase in imports.
Correct Answer
C
Correct Option:
A devaluation of the currency will lead to an improvement in the balance of payments if the sum of the elasticities of demand for exports and supply of imports is greater than 1.

About This Question

This is Post Utme Christopher University 2019 Economics Question 21. It is one of the objective questions from the 2019 Post Utme Christopher University Economics examination.

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