Post Utme Futo 2019 Economics Question 25

Practice objective / multiple choice question 25 from the 2019 Post Utme Futo Economics examination.

Post Utme Futo 2019 Economics Objective / Multiple Choice
Question 25 POST_UTME_FUTO • 2019 • ECONOMICS • objective

The Marshall-Lerner condition states that if the sum of the elasticities of demand for imports and supply of 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 supply of exports of 0.6?

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 Futo 2019 Economics Question 25. It is one of the objective questions from the 2019 Post Utme Futo Economics examination.

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