A. depreciation generally improves the trade balance
B. depreciation generally hurts the trade balance
C. no strong generalization is possible
D. depreciation has no effect on the trade balance
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The analysis considers the ability of domestic and foreign price of adjust to devaluation in the short run ?
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The shorter the ______ pass through period the ______ the desirable BOT effects of evaluation on quantities traded will appear ?
A. pass through
B. absorption
C. adjustment mechanism
D. currency contract period
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Suppose that the United Kingdom devalues the pound if both exports and imports are written in terms of pounds then the United Kingdom balance of trade during a currency contract period ?
A. sooner
B. longer
C. bigger
D. smaller
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If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?
A. improves
B. worsens
C. is unaffected
D. falls for a while before increasing
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Complete currency pass through arises when a 10 percent depreciation in the value of the dollar causes U.S?
A. should increase the dollar value of exports
B. should not have any effect on the dollar value of U.S imports
C. must increase the balance of trade
D. All of the above
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Given a two-country world, suppose Japan devalues the yen by 20 percent and west German devalues the mark by 15 percent This result is a (an)?
A. import prices to fall by 10 percent
B. import prices to rise by 10 percent
C. export prices to rise by 10 percent
D. export prices to fall by 10 percent
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If foreign manufacturing costs and profit margins in response to a depreciation in the U.S dollar the effect of these actions is to ?
A. appreciation in the value of both currencies
B. depreciation in the value of both currencies
C. appreciation in the value of the yen against the mark
D. depreciation in the value of the yen against the mark
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Because of the J curve effect and partial currency pass through, a depreciation of the domestic currency tends to increase the size of a ?
A. shorten the amount of time in which the depreciation leads to smaller trade deficit
B. shorten the amount of time in which the depreciation leads to smaller trade surplus
C. lengthen the amount of time in which the depreciation leads to smaller trade deficit
D. lengthen the amount of time in which the depreciation leads to smaller trade surplus
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According to the Marshall-Lerner condition if a country’s currency depreciates its trade balance will worsen if ?
A. trade surplus in the short run
B. trade surplus in the long run
C. trade deficit in the short run
D. trade deficit in the long run
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A. elasticity of demand for exports = 0.9; elasticity of demand for imports = 0.4
B. elasticity of demand for exports = 0.7; elasticity of demand for imports = 0.3
C. elasticity of demand for exports = 0.5; elasticity of demand for imports = 0.7
D. elasticity of demand for exports = 0.3; elasticity of demand for imports = 0.6