Which Approach Predicts That If an Economy Operates at Full

question 113

Multiple Choice

Which approach predicts that if an economy operates at full employment and faces a trade deficit,currency devaluation (depreciation) will improve the trade balance only if domestic spending is cut,thus freeing resources to produce exports?

• A) The absorption approach
• B) The Marshall-Lerner approach
• C) The monetary approach
• D) The elasticities approach

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