According to the J-curve effect,a depreciation of the pound's exchange value has:
A) No impact on a U.K.balance-of-trade deficit in the short run
B) No impact on a U.K.balance-of-trade deficit in the long run
C) An immediate negative effect on the U.K.balance of trade
D) An immediate positive effect on the U.K.balance of trade

Question

Quizplus · Accepted Answer

The J-curve effect suggests that a depreciation initially worsens the trade balance before improving it, due to contracts and price adjustments.

According to the J-Curve Effect,a Depreciation of the Pound's Exchange