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
Related Mcqs:
- 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. 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 - Economic theory predicts that a currency depreciation will least lead to an improvement in the home country’s trade balance when ?
A. home demand for imports is inelastic and foreign export demand is inelastic
B. home demand for imports is elastic and foreign export demand is inelastic
C. home demand for imports is inelastic and foreign export demand is elastic
D. home demand for imports is elastic and foreign export demand is elastic - The notion that, following a currency depreciation the balance of trade falls for a while before increasing is called an effect ?
A. relative price
B. elasticity
C. J Curve
D. Pass through - Which approach predicts that is an economy operates a full employment and faces trade deficit currency devaluation will improve the trade balance only if domestic spending is cut thus freeing resources to produce exports ?
A. the absorption approaches
B. the Marshall Lerner approach
C. the monetary approach
D. the elasticities approach - 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. 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 - According to the Marshall-Lerner condition if a country’s currency depreciates its trade balance will worsen if ?
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 - 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. improves
B. worsens
C. is unaffected
D. falls for a while before increasing - What is called that bank which regularly accepts foreign currency-denominated deposits and makes foreign currency-denominated deposits and makes foreign currency loans ?
A. Eurobank
B. Foreign bank
C. International Bank
D. Multinational Bank - When free trade areas are set up the member countries trade with each other grows faster than their trade with other countries This is due to what economist call ?
A. trade diversion
B. trade channeling
C. trade creation and trade diversion
D. trade creation - Concerning the hypothesis that there has occurred a long run deterioration in the developing countries terms of trade empirical studies provide ?
A. mixed evidence that does not substantiate the deterioration hypothesis
B. overwhelming support for the deterioration hypothesis
C. overwhelming opposition to the deterioration hypothesis
D. None of the above
