Lesson M4.3.2

M4.3.2 Marshall-Lerner condition, J-curve and globalisation Quiz: OCR Economics, Unit 9

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson M4.3.2, Marshall-Lerner condition, J-curve and globalisation: 20 multiple choice questions for the OCR Economics (H460), Unit 9: The global context, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. What condition states that currency devaluation improves the trade balance if PEDx + PEDm > 1?

    • J-curve effect
    • Fisher equation
    • Purchasing power parity
    • Marshall-Lerner condition

  2. What curve illustrates an initial trade balance deterioration following currency devaluation before subsequent improvement?

    • J-curve
    • Lorenz curve
    • Laffer curve
    • Kuznets curve

  3. Why does a currency devaluation often worsen the trade deficit in the short run?

    • Inelastic demand
    • High interest rates
    • Elastic demand
    • Rising inflation

  4. What is the combined elasticity requirement for the Marshall-Lerner condition to hold?

    • Greater than 1
    • Equal to 1
    • Equal to 0
    • Less than 1

  5. A country devalues its currency when PEDx is 0.4 and PEDm is 0.3. What happens to the trade balance?

    • It worsens
    • It stays unchanged
    • It improves
    • It turns positive

  6. If PEDx is 0.8 and PEDm is 0.5, what is the value tested against the Marshall-Lerner condition?

    • 1.3
    • 0.13
    • 0.3
    • 0.4

  7. Which factor primarily explains time lags along the J-curve after exchange rate devaluation?

    • Falling interest rates
    • Immediate price changes
    • Fixed exchange rates
    • Pre-existing contracts

  8. What process describes the increasing integration and interdependence of world economies?

    • Autarky
    • Protectionism
    • Nationalisation
    • Globalisation

  9. Which technological innovation significantly reduced transport costs and accelerated globalisation?

    • Refrigerated trucking
    • Containerisation
    • Canal dredging
    • Steam turbine

  10. What type of company operates production facilities in at least two different countries?

    • Public limited partnership
    • Domestic monopoly
    • Multinational corporation
    • State-owned enterprise

  11. What term describes the movement of productive activities to foreign countries to cut costs?

    • Offshoring
    • Import substitution
    • Insourcing
    • Nationalisation

  12. Which organisation primarily aims to promote free trade by reducing tariffs and trade barriers globally?

    • World Trade Organization
    • International Monetary Fund
    • World Bank
    • Central Bank

  13. What happens to import prices in local currency immediately following a currency depreciation?

    • They become zero
    • They increase
    • They decrease
    • They stay the same

  14. What long-run change in consumer behaviour causes the trade balance to improve along the J-curve?

    • Reduced income
    • Greater price elasticity
    • Lower export supply
    • Higher tariff rates

  15. If the sum of PEDx and PEDm equals exactly 1, how does currency devaluation affect the trade balance?

    • Doubles trade deficit
    • No net change
    • Improves significantly
    • Worsens significantly

  16. Which economic term refers to foreign direct investment made by a firm into a foreign nation?

    • ODA
    • FPI
    • M4
    • FDI

  17. What effect occurs when globalisation leads to worker wage stagnation in low-skilled domestic sectors?

    • Income inequality
    • Hyperinflation
    • Exchange rate appreciation
    • Trade surplus

  18. A foreign country imposes trade tariffs. How does this directly affect the domestic country's export demand?

    • Demand remains unaffected
    • Demand decreases
    • Demand increases
    • Demand shifts outward

  19. Which concept describes a country specialising in goods where it has a lower opportunity cost?

    • Competitive advantage
    • Economies of scale
    • Comparative advantage
    • Absolute advantage

  20. What impact does globalisation generally have on the price elasticity of demand for domestic goods?

    • Has zero impact
    • Increases elasticity
    • Makes demand vertical
    • Decreases elasticity

All OCR Economics quizzes