The Marshall-Lerner Condition States That, All Else Equal

question 76

Multiple Choice

The Marshall-Lerner Condition states that, all else equal

• A) nominal appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• B) real depreciation improves the current account if export and import volumes are sufficiently inelastic with respect to the real exchange rate.
• C) real appreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• D) real depreciation improves the current account if export and import volumes are sufficiently elastic with respect to the real exchange rate.
• E) the sum of import and export elasticities must be equal to one in order for depreciation to occur.

---

Definitions:

Intrinsic Motivation

The drive to engage in an activity for its own sake, rather than for the sake of obtaining a reward or avoiding punishment.

Extrinsic Motivation

The drive to perform an activity due to external rewards or pressures, rather than for intrinsic satisfaction.

Extrinsic Motivation

Motivation that stems from outward incentives like financial gain, recognition, academic scores, or commendation.

Intrinsic Motivation

The drive to engage in activities for their own sake, because they are interesting or enjoyable, not for some external reward.