This video lesson is part two of a lesson on the Marshall-Lerner Condition and the J-curve. Before watching this video, make sure you have watched the lecture on the Marshall-Lerner Condition.
This lesson will explain how a depreciation of a nation’s currency is likely to affect the nation’s current account balance in the short-run and in the long-run depending on the price elasticity of demand for exports and imports.
After watching the video, read and respond to the discussion questions in the following blog post: The Marshall-Lerner Condition, the J-curve, and the US trade deficit
There is also an in-class research assignment to accompany this lesson. We will do this in my class with HL students over the next two class periods. Elasticity, exchange rates and the balance of payments – understanding the Marshall Lerner Condition