A country that uses a fixed exchange rate and has a deficit on the current account of its balance of payments moves into recession. It then devalues its currency in an attempt to put right its balance of payments. Under which conditions is the deficit most likely to improve?
- Aprice elasticity of demand for imports 0.3 / price elasticity of demand for exports 0.5 / income elasticity of demand for imports 0.8
- Bprice elasticity of demand for imports 0.4 / price elasticity of demand for exports 0.8 / income elasticity of demand for imports 0.8
- Cprice elasticity of demand for imports 0.3 / price elasticity of demand for exports 0.5 / income elasticity of demand for imports 1.2
- Dprice elasticity of demand for imports 0.4 / price elasticity of demand for exports 0.8 / income elasticity of demand for imports 1.2