A government’s macroeconomic aim is to change the current account of the balance of payments from a deficit to a surplus. To do this, it devalues the currency. In what condition would a devaluation of the currency succeed in achieving this aim?
- Aif the combined price elasticity of demand for exports and imports is greater than 1
- Bif the combined price elasticity of demand for exports and imports is less than 1
- Cif the income elasticity of demand is less than 1
- Dif other countries decide to impose tariffs on all imported goods and services