Post Utme Skyline University 2017 Economics Question 16

Practice objective / multiple choice question 16 from the 2017 Post Utme Skyline University Economics examination.

Post Utme Skyline University 2017 Economics Objective / Multiple Choice
Question 16 POST_UTME_SKYLINE_UNIVERSITY • 2017 • 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. Which of the following scenarios would lead to a violation of the Marshall-Lerner condition?

Answer Options

A. A 10% increase in the price of imports leads to a 5% decrease in imports
B. A 5% decrease in the price of exports leads to a 10% increase in exports
Correct Answer C. A 20% increase in the price of imports leads to a 15% decrease in imports
D. A 10% decrease in the price of exports leads to a 5% increase in exports
Correct Answer
C
Correct Option:
A 20% increase in the price of imports leads to a 15% decrease in imports

About This Question

This is Post Utme Skyline University 2017 Economics Question 16. It is one of the objective questions from the 2017 Post Utme Skyline University Economics examination.

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