Q. A country’s balance of trade initially worsens following a devaluation of its currency, then quickly recovers and finally surpasses its previous performance – describes which of the following?

[A] Laffer Curve effect

[B] Kuznets Curve effect

[C] Producers responsibility effect

[D] J u2013 Curve effect

Answer: D
Notes:
  • The J-curve effect is often cited in economics to describe, for instance, the way that a country’s balance of trade initially worsens following a devaluation of its currency, then quickly recovers and finally surpasses its previous performance.

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