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Author Question: Explain what the J-curve is and why it occurs. What will be an ideal ... (Read 31 times)

audie

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on: Jun 30, 2018
Explain what the J-curve is and why it occurs.
 
  What will be an ideal response?

Question 2

An increase in the price of oil will cause which of the following in the medium run?
 
  A) no change in the level of output
  B) no change in the price level
  C) an increase in the unemployment rate
  D) a reduction in the interest rate
  E) none of the above


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mochi09

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The J-curve illustrates graphically the dynamic adjustment of NX to a depreciation when the Marshall-Lerner condition does not hold initially but does hold eventually. If ML does not hold initially, a depreciation will cause NX to fall. Over time, the quantities of exports and imports will adjust causing NX to rise and eventually increase above its initial level. Tracing out the path of NX in this case resembles a J. Hence, the J-curve.

Answer to Question 2

C


audie

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Reply 2 on: Jun 30, 2018
Thanks for the timely response, appreciate it

scottmt

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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