Exam 23: Price Adjustments and Balance-Of-Payments Disequilibrium

The shape of the curve that shows the effect of currency depreciation upon a country's current account balance over time, with the curve itself being known as the __________, reflects the fact that short-run demand elasticities are sufficiently __________ than long- Run elasticities to generate this particular shape. (Ignore the negative sign on the Elasticities.)

Which of the following occurs if a country A depreciates its currency relative to country B's currency?

When considering the change in price of a country's imports when foreign currencies depreciate by 10 percent relative to the home country, the "elasticity of exchange rate pass-through" would be equal to

Other things equal, which of the following occurs if a country A appreciates its Currency relative to country B's currency?