Question
Economics Question on Economics and economic theories
As per the Marshall Lerner conditions, for the trade balance to improve following depreciation of the currency:
A
the sum of the elasticities of exports and imports should be greater than 1
B
the sum of the elasticities of exports and imports should be less than 1
C
the sum of the elasticities of exports and imports should be equal to 1
D
the sum of the elasticities of exports and imports should be equal to zero
Answer
the sum of the elasticities of exports and imports should be greater than 1
Explanation
Solution
The correct option is(A): the sum of the elasticities of exports and imports should be greater than 1