Assume That a Country Is Experiencing a Balance of Trade

question 45

Multiple Choice

Assume that a country is experiencing a balance of trade deficit and then suffers a rapid depreciation of its currency. J-curve theory suggests that the trade balance will adjust in three distinct periods in the following order

• A) quantity adjustment period; pass-through period; currency contract period.
• B) pass-through period; currency contract period; quantity adjustment period.
• C) currency contract period; pass-through period; quantity adjustment period.
• D) pass-through period; quantity adjustment period; currency contract period.

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Definitions:

Dependent Variable

The dependent variable is the variable being tested and measured in an experiment or study, whose value is expected to change as a result of manipulations to the independent variable(s).

Independent Variable

is a factor or condition that is intentionally manipulated or varied by researchers to observe its effect on a dependent variable in an experiment.

Constraint

A limitation or restriction that affects the process or progress of a project, operation, or strategy.

External Data Sources

Data collected from outside an organization, including public data sets, market research, and information from business partners or third-party providers.