Post Utme Delsu 2017 Economics Question 31

Practice objective / multiple choice question 31 from the 2017 Post Utme Delsu Economics examination.

Post Utme Delsu 2017 Economics Objective / Multiple Choice
Question 31 POST_UTME_DELSU • 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 a decrease in imports and an increase in exports.
B. A devaluation will lead to an increase in imports and a decrease in exports.
Correct Answer C. A devaluation will lead to an improvement in the balance of payments if the sum of the elasticities of demand for exports and imports is greater than 1.
D. A devaluation will lead to a decrease in exports and an increase in imports.
Correct Answer
C
Correct Option:
A devaluation will lead to an improvement in the balance of payments if the sum of the elasticities of demand for exports and imports is greater than 1.

About This Question

This is Post Utme Delsu 2017 Economics Question 31. It is one of the objective questions from the 2017 Post Utme Delsu Economics examination.

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