The Marshall-Lerner Condition Is Less Likely to Hold When

question 71

Multiple Choice

The Marshall-Lerner condition is less likely to hold when

• A)imports and exports are very price-sensitive.
• B)the trade deficit is large.
• C)the marginal propensity to consume is very large.
• D)the marginal propensity to consume if very small.
• E) none of the above

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Definitions:

Corn Future Contract

A standardized legal agreement to buy or sell corn at a predetermined price at a specified time in the future, used as a financial instrument for speculation or hedging.

Spot Price

The current market price at which an asset can be bought or sold for immediate delivery.

Bushel

A unit of volume that is used in agriculture, specifically in the United States, for measuring quantities of grain.

Treasury Bonds

Long-term government debt securities with a fixed interest rate, considered low-risk investments.