According to the Marshall-Lerner condition which of the following countries' balance of trade will improve following a currency devaluation?
Which of the following defines the term recession?
Could fall without becoming negative (also likely to be short run).
Correct: This is the accepted definition of a recession.
The table below shows the number of labour hours daily that the two countries need to produce one unit of each of the two goods. Other factors of production are used in equal quantities in the two countries.
Country X has a comparative advantage in coffee.
What is the missing number from the table?
This would mean neither country having a comparative advantage in either good.
Correct: It requires comparatively little labour to produce a unit of coffee.
The missing figure has to show relatively few units of labour being used to produce a unit of coffee.