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G. Home output falls more under a floating rate than under a fixed rate in response to an adverse temporary export demand shock. [Diagram
G. Home output falls more under a floating rate than under a fixed rate in response to an adverse temporary export demand shock. [Diagram required] H. Under PPP (and by the Fisher Effect), A rise in a country's expected inflation rate will eventually cause a less than proportional rise in the interest rate that depositors of its currency offer to accommodate the rise in expected inflation. I. The Marshall-Lerner Condition states that the sum of import and export elasticities must be equal to one in order for depreciation to occur. J. The J-curve illustrates the long-term effects of depreciation on the current account. [diagram required]
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