The Marshall-Lerner Condition Holds That a Country's Current Account Balance

question 96

Multiple Choice

The Marshall-Lerner condition holds that a country's current account balance will ________ in response to a real ________ in a nation's currency if the________.

• A) improve; depreciation; sum of the price elasticities of export and import demand exceeds 1
• B) worsen; depreciation; sum of the price elasticities of export and import demand exceeds 1
• C) improve; appreciation; sum of the price elasticities of export and import demand exceeds 1
• D) improve; appreciation; sum of the price elasticities of export and import demand exceeds 0
• E) worsen; depreciation; sum of the price elasticities of export and import demand exceeds 0

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Definitions:

Significance Level

A threshold within which the p-value of a hypothesis test must fall for the result to be deemed statistically significant, typically set at 0.05 or 5%.

Test Power

The likelihood that a statistical test will correctly reject a false null hypothesis, identifying an effect when it is present.

Level of Significance

The threshold used in statistical hypothesis testing to decide whether to reject the null hypothesis, typically denoted by alpha (α) and set prior to conducting a test.

Measure of Performance

A metric used to evaluate the effectiveness, efficiency, or quality of a procedure, process, or activity.