Which of the following is true for the J-curve effect?
A) It applies to the interest rate effects of currency depreciation.
B) It applies to the income effects of currency depreciation.
C) It suggests that demand tends to be most elastic over the long run.
D) It suggests that demand tends to be least elastic over the long run.

Question

Quizplus · Accepted Answer

The J-curve effect suggests that demand tends to be most elastic over the long run, meaning that over time, consumers and businesses adjust to changes in prices (such as those caused by currency depreciation), leading to a greater responsiveness in the quantity demanded.

Which of the Following Is True for the J-Curve Effect