As per the Marshall Lerner conditions, for the trade balance to improve following depreciation of the currency:
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4 marks, −1International EconomicsBalance of payments and exchange ratesDevaluation, the Marshall-Lerner condition and the J-curveModerateabout 1 min
CUET-PG 2023 Shift 2 Question 79: Balance of payments and exchange rates
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What this question tests
This question is on Devaluation, the Marshall-Lerner condition and the J-curve, part of Balance of payments and exchange rates in International Economics.
When a fall in the currency improves the trade balance and why it may first worsen it.
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Question from the CUET-PG 2023 Shift 2 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.