Assuming the Marshall-Lerner Condition Holds and Using the ZZ

question 31

Essay

Assuming the Marshall-Lerner condition holds and using the ZZ / Y and NX graphs,illustrate graphically and explain what effect a real depreciation will have on output,exports,imports,and net exports.Clearly label all curves and clearly label the initial and final equilibria.

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Definitions:

Annual Rate

The interest rate for a period of one year, often used to compare the yields of different investment and financing options.

ABC System

A system of controlling inventory that recognizes the differing cost and importance of various items. A parts are expensive and/or important and are controlled carefully. C parts are cheap and plentiful, so little effort is expended to monitor them. B parts are between As and Cs.

Inventory Management

The oversight of non-capitalized assets (inventory) and stock items, involving the control of ordering, storing, and using a company's inventory.

Accessible

Refers to something that can be easily approached, entered, or used; in financial terms, it may refer to assets or funds that can be readily tapped or utilized.