If a country devalues or depreciates its currency, the Marshall-Lerner condition states that the balance of payments on current account will improve if:
the sum of the price elasticities of demand for exports and imports is greater than one (in absolute value).
the sum of the price elasticities of demand for exports and imports is less than one (in absolute value).
the cross-price elasticity of demand between domestic goods and foreign imports is negative.
the income elasticity of demand for exports is greater than the income elasticity of demand for imports.
38 exam-style questions on OCR A Level Economics Balance of payments. Each one has a worked solution and a mark scheme showing where the marks go.