One implication of an empirical investigation of the Marshall-Lerner condition is that, in the ________, a real ________ in a nation's currency is likely to ________ the country's current account balance.
A) long run; depreciation; improve
B) short run; depreciation; improve
C) long run; appreciation; improve
D) short run; appreciation; improve
E) short run but not the long run; appreciation; improve

Question

Quizplus · Accepted Answer

The Marshall-Lerner condition suggests that in the long run, a real depreciation of a nation's currency is likely to improve the country's current account balance by making exports cheaper and imports more expensive, thus increasing export volumes and reducing import volumes.

One Implication of an Empirical Investigation of the Marshall-Lerner Condition