Economics · International Trade
According to economic theory, a devaluation of a country's currency can successfully improve its trade balance if which condition is met?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The share of essential goods in its total imports is high
- 2The price elasticity of demand for its exports is perfectly inelastic
- 3The import content of its exports is exceptionally high
- 4The Marshall-Lerner condition holds true (sum of price elasticities of demand for exports and imports is greater than 1)✓
Correct answer
The Marshall-Lerner condition holds true (sum of price elasticities of demand for exports and imports is greater than 1)
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