Post Utme Wellspring University 2020 Economics Question 34

Practice objective / multiple choice question 34 from the 2020 Post Utme Wellspring University Economics examination.

Post Utme Wellspring University 2020 Economics Objective / Multiple Choice
Question 34 POST_UTME_WELLSPRING_UNIVERSITY • 2020 • 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. What is the implication of this condition on the trade balance?

Answer Options

Correct Answer A. A devaluation will lead to an increase in the trade balance.
B. A devaluation will lead to a decrease in the trade balance.
C. The trade balance will remain unchanged.
D. The Marshall-Lerner condition is irrelevant to the trade balance.
Correct Answer
A
Correct Option:
A devaluation will lead to an increase in the trade balance.

About This Question

This is Post Utme Wellspring University 2020 Economics Question 34. It is one of the objective questions from the 2020 Post Utme Wellspring University Economics examination.

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