The Marshall-Lerner Condition States That, All Else Equal

question 76

Multiple Choice

The Marshall-Lerner Condition states that, all else equal

• A) nominal appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• B) real depreciation improves the current account if export and import volumes are sufficiently inelastic with respect to the real exchange rate.
• C) real appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• D) real depreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• E) the sum of import and export elasticities must be equal to one in order for depreciation to occur.

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