A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2010 · Q281 Mark
In a country the Marshall-Lerner condition for an improvement in the trade balance is satisfied in the long run, but quantities of imports and exports are slow to respond to price changes. The government devalues its currency to reduce its trade deficit. Which curve indicates the probable behaviour of the trade balance? [Figure 28.1]
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✓ Correct answer
B: B
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