For This Question,assume That the Marshall-Lerner Condition Does Not Hold

question 62

Multiple Choice

For this question,assume that the Marshall-Lerner condition does not hold.A reduction in the real exchange rate will tend to cause which of the following to occur?

• A)a reduction in NX and a reduction in foreign output (Y*)
• B)a reduction in NX and an increase in domestic output (Y)
• C)an increase in NX and a reduction in Y
• D)an increase in NX and an increase in Y
• E) none of the above

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Definitions:

Lack

The absence or deficiency of something desirable or necessary.

Apart

Separated by a distance or gap, or considered as separate or distinct entities.

Toward

A direction or orientation leading closer to a specific location or object.

Near

Located at a short distance in space or time.