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    International Economics Study Set 12
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    Exam 13: Mechanisms of International Adjustment
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    The Elasticity Approach to Currency Depreciation Emphasizes the Relative Price
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The Elasticity Approach to Currency Depreciation Emphasizes the Relative Price

Question 79

Question 79

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The elasticity approach to currency depreciation emphasizes the relative price effects of depreciation and suggests that depreciation best improves a country's trade balance when the elasticities of demand for the country's imports and exports are high.

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