If export supply and import supply are assumed to be perfectly elastic, which pair of demand elasticities for imports and exports would mean that a 10 % decrease in a currency’s value causes the trade account in a country’s balance of payments to deteriorate?
- Aelasticity of demand for exports 0.5, elasticity of demand for imports 0.25
- Belasticity of demand for exports 0.5, elasticity of demand for imports 0.5
- Celasticity of demand for exports 1.0, elasticity of demand for imports 0.75
- Delasticity of demand for exports 1.0, elasticity of demand for imports 1.0