The Shape of the Curve That Shows the Effect of Currency

question 21

Multiple Choice

The shape of the curve that shows the effect of currency depreciation upon a country's current account balance over time, with the curve itself being known as the __________, reflects the fact that short-run demand elasticities are sufficiently __________ than long- Run elasticities to generate this particular shape. (Ignore the negative sign on the Elasticities.)

• A) J curve; lower
• B) J curve; higher
• C) supply curve of foreign exchange; lower
• D) supply curve of foreign exchange; higher

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