Multiple Choice
The Marshall-Lerner condition indicates that
A) if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be stable.
B) if the sum of the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be unstable.
C) if the net differential between the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be stable.
D) if the net differential between the price elasticities of the demand for imports and the demand for exports exceeds 1 the foreign exchange market will be unstable.
Correct Answer:
Verified
Correct Answer:
Verified
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