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Basic Question 12 of 15
Assume the Canadian demand elasticity for imports equals 1.2 while the foreign demand elasticity for Canadian exports equals 1.8. Responding to a trade deficit, suppose the Canadian dollar depreciates by 10 percent. For Canada, the depreciation would lead to a(n) ______
B. improving trade balance - a smaller deficit
C. unchanged trade balance
A. worsening trade balance - a larger deficit
B. improving trade balance - a smaller deficit
C. unchanged trade balance
User Contributed Comments 2
User | Comment |
---|---|
johntan1979 | Ex + Em > 1 (unit elasticity) |
FozzeyBear | johntan1979 you make me very angry |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
describe exchange rate regimes and explain the effects of exchange rates on countries' international trade and capital flows
CFA® 2025 Level I Curriculum, Volume 1, Module 7.