CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

According to the Marshall-Lerner approach, a currency depreciation will BEST lead to an improvement on the home country's trade balance when the home demand for imports is ______

A. inelastic; foreign export demand is elastic.
B. elastic; foreign export demand is inelastic.
C. elastic; foreign export demand is elastic.
Correct Answer: C

More elastic demand for either imports or exports makes it more likely that the trade balance will improve in this case.

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