Assume That the Marshall- Lerner Condition Does Not Hold

question 15

Multiple Choice

Assume that the Marshall- Lerner condition does not hold. A decrease in the real exchange rate will tend to cause which of the following to occur?

• A) A decrease in NX and a decrease in Y.
• B) A decrease in NX and an increase in Y.
• C) An increase in NX and an increase in Y.
• D) An increase in NX and a decrease in Y.
• E) A decrease in NX and a decrease in Y*.

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