What does the Marshall-Lerner condition state must be present for a depreciation of a currency to cause an improvement in the current account balance?
Select ONE answer:
- The price elasticity of demand for exports and the price elasticity of demand for imports are both greater than one.
- The price elasticity of demand for exports and the price elasticity of demand for imports are both less than one.
- The sum of the price elasticity of demand for exports and the price elasticity of demand for imports is greater than one.
- The sum of the price elasticity of demand for exports and the price elasticity of demand for imports is less than one.
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Economics KS4 and KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct
- Not correct
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