Post Utme Coal City University 2025 Economics Question 20

Practice objective / multiple choice question 20 from the 2025 Post Utme Coal City University Economics examination.

Post Utme Coal City University 2025 Economics Objective / Multiple Choice
Question 20 POST_UTME_COAL_CITY_UNIVERSITY • 2025 • ECONOMICS • objective

The Marshall-Lerner condition states that if the sum of the elasticities of demand for imports and exports is greater than 1, then a devaluation of the currency will lead to an improvement in the balance of payments. What is the implication of this condition on the optimal level of devaluation?

Answer Options

A. Devaluation will lead to a significant improvement in the balance of payments.
Correct Answer B. Devaluation will lead to a small improvement in the balance of payments.
C. Devaluation will lead to a worsening of the balance of payments.
D. The Marshall-Lerner condition is irrelevant to the optimal level of devaluation.
Correct Answer
B
Correct Option:
Devaluation will lead to a small improvement in the balance of payments.

About This Question

This is Post Utme Coal City University 2025 Economics Question 20. It is one of the objective questions from the 2025 Post Utme Coal City University Economics examination.

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