The table gives the values for an economy's short-run and long-run elasticities of demand for exports and imports. In which circumstance does depreciation lead to a J curve where the current account of the balance of payments worsens in the short run and improves in the long run?

A.
B.
C.
D.
Economics
IGCSE&ALevel
CAIE
Exam No:9708_s25_qp_34 Year:2025 Question No:27

Answer:

B

Knowledge points:

11.2.5 the effects of changing exchange rates on the external economy using Marshall-Lerner and J curve analysis
2.2.1 definition of price elasticity, income elasticity and cross elasticity of demand (PED, YED, XED)

Solution:

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