Economics · Balance of Payments
The 'J-curve effect' in balance of payments adjustment suggests that after currency devaluation:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The trade balance improves immediately without lag
- 2The trade balance initially worsens before eventually improving✓
- 3Exchange rate changes have no impact on trade flows
- 4Import prices adjust faster than export prices
Correct answer
The trade balance initially worsens before eventually improving
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