The Marshall- Lerner Condition Is Less Likely to Hold When

question 55

Multiple Choice

The Marshall- Lerner condition is less likely to hold when:

• A) the trade deficit is large.
• B) the value effect outweighs the volume effect of a real exchange rate change.
• C) the marginal propensity to consume is very large.
• D) the marginal propensity to consume is very small.
• E) imports and exports are very price- sensitive.

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Definitions:

Collectivistic Cultures

Societies that prioritize the needs and goals of the group over those of the individual, emphasizing interdependence, cooperation, and social harmony.

Individualistic Cultures

Societies that emphasize personal achievements and rights, prioritizing individual liberty and independence over collective goals.

Industrialised Cultures

Cultures that have experienced significant development in technology, industrial production, and economic growth, impacting societal norms and lifestyles.

Interdependent

Mutually reliant on each other; describes a condition where two or more entities depend on each other for support or existence.