The Marshall- Lerner Condition Is Less Likely to Hold When

Multiple Choice

The Marshall- Lerner condition is less likely to hold when:

A) the trade deficit is large.
B) the value effect outweighs the volume effect of a real exchange rate change.
C) the marginal propensity to consume is very large.
D) the marginal propensity to consume is very small.
E) imports and exports are very price- sensitive.