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Basic Question 12 of 15
Assume the Canadian demand elasticity for imports equals 1.2 while the foreign demand elasticity for Canadian exports equals 1.8. Responding to a trade deficit, suppose the Canadian dollar depreciates by 10 percent. For Canada, the depreciation would lead to a(n) ______
B. improving trade balance - a smaller deficit
C. unchanged trade balance
A. worsening trade balance - a larger deficit
B. improving trade balance - a smaller deficit
C. unchanged trade balance
User Contributed Comments 2
User | Comment |
---|---|
johntan1979 | Ex + Em > 1 (unit elasticity) |
FozzeyBear | johntan1979 you make me very angry |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe exchange rate regimes and explain the effects of exchange rates on countries' international trade and capital flows
CFA® 2024 Level I Curriculum, Volume 1, Module 7.