Post Utme Madonna University 2019 Economics Question 36

Practice objective / multiple choice question 36 from the 2019 Post Utme Madonna University Economics examination.

Post Utme Madonna University 2019 Economics Objective / Multiple Choice
Question 36 POST_UTME_MADONNA_UNIVERSITY • 2019 • 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 statements is a correct interpretation of this condition?

Answer Options

A. A devaluation of the currency will lead to a decrease in the trade deficit.
B. A devaluation of the currency will lead to an increase in the trade deficit.
Correct Answer C. A devaluation of the currency will lead to an improvement in the balance of payments.
D. A devaluation of the currency will lead to a decrease in the trade surplus.
Correct Answer
C
Correct Option:
A devaluation of the currency will lead to an improvement in the balance of payments.

About This Question

This is Post Utme Madonna University 2019 Economics Question 36. It is one of the objective questions from the 2019 Post Utme Madonna University Economics examination.

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