A devaluation of a currency under the fixed exchange rate regime is likely to have no impact on the balance of trade, if
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4 marks, −1International EconomicsBalance of payments and exchange ratesDevaluation, the Marshall-Lerner condition and the J-curveModerateabout 1 min
JNU SIS 2014 Question 21: 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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