A Currency Depreciation Usually Leads to a Short-Term Worsening of the Trade

question 37

Multiple Choice

A currency depreciation usually leads to a short-term worsening of the trade balance followed by a trade balance improvement.This phenomenon is referred to as the

• A)hysteresis effect
• B)J-curve effect
• C)purchasing power parity effect
• D)exchange rate overshooting effect
• E)sterilization effect

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Definitions:

Animal Products

Goods derived from the bodies of animals, including meat, dairy, wool, and leather.

Nitrogen-Restoring

A process or practice that helps replenish nitrogen in the soil, often through natural means like the planting of leguminous plants or through technological interventions.

Intercropping

An agricultural practice that involves growing two or more crops in proximity for purposes such as pest control, pollination, and to increase productivity.

Alfalfa

A leguminous plant with clover-like leaves and bluish flowers, widely grown as forage for cattle and as a nitrogen-fixing crop, enriching soil fertility.