Post Utme Esut 2019 Economics Question 28

Practice objective / multiple choice question 28 from the 2019 Post Utme Esut Economics examination.

Post Utme Esut 2019 Economics Objective / Multiple Choice
Question 28 POST_UTME_ESUT • 2019 • 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 for a country with an elasticity of demand for imports of 0.8 and an elasticity of demand for exports of 1.2?

Answer Options

A. The country will experience a deterioration in its balance of payments
B. The country will experience no change in its balance of payments
Correct Answer C. The country will experience an improvement in its balance of payments
D. The country will experience a worsening of its trade deficit
Correct Answer
C
Correct Option:
The country will experience an improvement in its balance of payments

About This Question

This is Post Utme Esut 2019 Economics Question 28. It is one of the objective questions from the 2019 Post Utme Esut Economics examination.

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