Post Utme Mountain Top University 2022 Economics Question 36

Practice objective / multiple choice question 36 from the 2022 Post Utme Mountain Top University Economics examination.

Post Utme Mountain Top University 2022 Economics Objective / Multiple Choice
Question 36 POST_UTME_MOUNTAIN_TOP_UNIVERSITY • 2022 • 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. Which of the following is a necessary condition for the Marshall-Lerner condition to hold?

Answer Options

A. The elasticity of demand for imports is greater than the elasticity of demand for exports.
Correct Answer B. The sum of the elasticities of demand for imports and exports is greater than 1.
C. The elasticity of demand for exports is greater than the elasticity of demand for imports.
D. The sum of the elasticities of demand for imports and exports is less than 1.
Correct Answer
B
Correct Option:
The sum of the elasticities of demand for imports and exports is greater than 1.

About This Question

This is Post Utme Mountain Top University 2022 Economics Question 36. It is one of the objective questions from the 2022 Post Utme Mountain Top University Economics examination.

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