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?
Quarterly-SFG-Jan-to-March
Red Book

[A] Laffer Curve effect

[B] Kuznets Curve effect

[C] Producers responsibility effect

[D] J - 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. 

Source: TMH Ramesh Singh 


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