A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2020 · Q241 Mark
A country has a balance of payments deficit. It devalues its currency. Which combination leads to a reduction in its balance of payments deficit in the long run?
Aprice elasticity of demand for exports less than 0.5, price elasticity of demand for imports less than 0.5
Bprice elasticity of demand for exports less than 1, price elasticity of demand for imports zero (0)
Cprice elasticity of demand for exports more than 0.5, price elasticity of demand for imports more than 0.5
Dprice elasticity of demand for exports zero (0), price elasticity of demand for imports less than 1
✓ Correct answer
C: price elasticity of demand for exports more than 0.5, price elasticity of demand for imports more than 0.5
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