616EconomicsMedium
Economic theory predicts that a currency depreciation will least lead to an improvement in the home country’s trade balance when?
Ahome demand for imports is inelastic and foreign export demand is inelastic
Bhome demand for imports is inelastic and foreign export demand is elastic
Chome demand for imports is elastic and foreign export demand is elastic
Dhome demand for imports is elastic and foreign export demand is inelastic
Correct answer
A. home demand for imports is inelastic and foreign export demand is inelastic
Explanation
The correct answer is home demand for imports is inelastic and foreign export demand is inelastic.