Problem
1. How does a currency depreciation affect a nation's balance of trade?
2. Three major approaches to analyzing the economic impact of currency depreciation are
(a) the elasticities approach, (b) the absorption approach, and
(c) the monetary approach. Distinguish among the three.
3. What is meant by the Marshall-Lerner condition? Do recent empirical studies suggest that world elasticity conditions are sufficiently high to permit successful depreciations?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.