The Marshall-Lerner Condition Indicates That

question 11

Multiple Choice

The Marshall-Lerner condition indicates that

• A) if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be stable.
• B) if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be unstable.
• C) if the net differential between the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be stable.
• D) if the net differential between the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be unstable.

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Definitions:

Value

The importance, worth, or usefulness of something, often measured in terms of money, but also can be subjective, depending on individual assessment.

Law Merchant

In England, the commercial law developed by merchants who needed a set of rules to govern their business transactions.

Holder in Due Course

A person or entity that has acquired a negotiable instrument in good faith and has certain protections under the law.

Negotiable Instrument

A document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer named on the document.