Author Question: The notion that, following a devaluation, the BOT falls for a while before increasing is called a ... (Read 63 times)

sc00by25 · **on:** Jun 30, 2018

The notion that, following a devaluation, the BOT falls for a while before increasing is called a ________ effect.

A) relative price
B) elasticity
C) J-curve
D) pass-through

Question 2

The push toward creating more regional trade agreements necessarily harms the multilateral liberalization process that is at the heart of the WTO.

What will be an ideal response?

jliusyl · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

There are some economists, most notably Bhagwati, who would agree with this statement. They oppose regionalism because of the trade diversion it causes and because, they argue, regional agreements distract countries from the multilateral process. Others, including Krugman, argue that regionalism is a natural process, owing to regional cultural similarities and the economics of transportation costs. These agreements do not divert much trade, they contend, because trade tends to be regional anyway and because external barriers are low. Moreover, success in negotiating regional agreements may spur on multilateral talks.