Post Utme Unilorin 2023 Economics Question 26

Practice objective / multiple choice question 26 from the 2023 Post Utme Unilorin Economics examination.

Post Utme Unilorin 2023 Economics Objective / Multiple Choice
Question 26 POST_UTME_UNILORIN • 2023 • ECONOMICS • objective

Consider a small open economy with a fixed exchange rate. The country's import demand function is given by \( ID = 100 - 2P \), where ( P ) is the price of imports in domestic currency. The country's export supply function is given by \( ES = 50 + P \). Assuming the exchange rate is fixed at 1 unit of domestic currency per unit of foreign currency, derive the Marshall-Lerner condition for this economy.

Answer Options

Correct Answer A. \( \frac{dID}{dP} + \frac{dES}{dP} < 0 \)
B. \( \frac{dID}{dP} + \frac{dES}{dP} > 0 \)
C. \( \frac{dID}{dP} + \frac{dES}{dP} = 0 \)
D. \( \frac{dID}{dP} + \frac{dES}{dP} \neq 0 \)
Correct Answer
A
Correct Option:
\( \frac{dID}{dP} + \frac{dES}{dP} < 0 \)

About This Question

This is Post Utme Unilorin 2023 Economics Question 26. It is one of the objective questions from the 2023 Post Utme Unilorin Economics examination.

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