If there is a national capital component, it can explain the many purposes of currency depreciation

This is not necessarily the case, and it may also increase a country's balance of payments deficit, a phenomenon that we call the failure of the balance of payments effect of currency depreciation.

During the 1997 Southeast Asian financial crisis, countries such as Thailand, Malaysia, Indonesia, the Philippines, Singapore, and South Korea depreciated between 30% and 70%, which was rare. In recent years, the currencies of these countries, such as the Russian financial crisis, the Turkish financial crisis, the Brazilian financial crisis, and the Argentine financial crisis, have also seriously depreciated their currencies, but the improvement effect of the balance of payments of currency depreciation is not obvious.

Not necessarily. In general, a country's currency depreciation can improve its balance of payments.

Because through the depreciation of the national currency will make it possible to prompt frequent attacks on the project in the short term.

can effectively receive the effect of improving revenue and expenditure; However, the capital account may cause capital outflow before and after the depreciation expectation is formed, and when the depreciation of a country's currency forms the expectation that the economic behavior tends to depreciate, the impact of the capital account will be eliminated, and the improvement of the current account will be eliminated, which will exacerbate the deterioration of the balance of payments.

Extended Materials. 1. Under the premise that a country is underemployed, and therefore has sufficient idle production resources to make the supply of export commodities completely elastic, the effect of depreciation depends on the elasticity of demand. Elasticity of demand refers to the degree of change in the quantity of import and export demand caused by the change in **.

If the change in quantity is greater than the change in **, the elasticity of demand is greater than 1; Conversely, if the change in quantity is less than the change in **, the elasticity of demand will be less than 1Only when the elasticity of import demand in the depreciating country is greater than 0 (decrease in imports) and greater than 1 (increase in exports) can depreciation improve the ** balance of payments. If DX is used to represent the elasticity of demand for the export goods of other countries to the depreciating country, and DM represents the elasticity of import demand, then when DX DM is 1, that is, the sum of the elasticity of export demand and the elasticity of import demand is greater than 1, depreciation can improve the ** balance of payments.

This is the Marshall Lerner condition.

2. For example, suppose that the demand elasticity of a country's exports is 1 4, that is, the increase rate of export volume is only 1 4 of the decline rate, if the export rate is reduced by 4, the export volume only increases by 1, and the total export value will decrease by 3Assuming that the elasticity of demand for imported goods is 3 4, that is, domestic ****4, the number of imports will be reduced by 3, and the total value of imports will also be reduced by 3Since the sum of these two flexibilities is equal to 1, the value of imports and exports moves in the same direction and the same amount, and the difference remains the same, i.e., the country's balance of payments does not improve.

If DX DM 1, ** income and expenditure can be improved; If DX DM 1, the ** income and expenditure worsens.

3. Industrially developed countries.

Most of the imports and exports are highly elastic manufactured goods, so in general, currency depreciation plays a greater role. On the contrary, developing countries.

of imports and exports are mostly low-elastic commodities, so currency depreciation has little effect.

4. That is to say, developing countries can only improve their balance of payments through changes in exchange rate changes by changing the commodity structure of imports and exports, from exporting low-elastic primary products to exporting high-elastic manufactured goods.

When the foreign currency appreciates and the local currency depreciates, the national interest rate is greater than the domestic interest rate, and the domestic capital () aOutflow. b.Inflow.

c.No change. d.There is no way to determine.

Correct answer: Outflow.

If the domestic currency is positive relative to foreign countries and the money supply grows (), the national currency depreciates.

a.The growth in net income was lower than the actual lifting.

b.More than the growth of real income.

c.Below the growth of nominal income.

d.More than the growth of nominal income.

Correct answer: B

Answer]: C This question examines the relationship between currency depreciation and imports and exports, and the answer is C. Depreciation makes domestic products cheaper abroad, which is good for exports, and a rise in foreign products** will discourage imports.

Answer]: False. Currency depreciation is good for the medium- and long-term capital flows, as the cost of foreign investment falls and the cost of domestic foreign investment increases. The impact on short-term capital is detrimental to the sluggishness of the capital, because arbitrage capital will be pumped out of the country.