Economics A-Level
J-Curve Effect
What J-Curve Effect means in Economics A-Level, as defined for AQA.
Definition of J-Curve Effect
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Reference: AQA
The phenomenon whereby a currency depreciation initially worsens the current account balance in the short run (due to price inelastic demand for imports and exports) before improving it in the long run (as demand becomes more elastic and volumes adjust). The path of the current account traces the shape of the letter J.
Topics that use J-Curve Effect
- The balance of payments (AQA A-Level)
Related terms
- Balance of payments
- Capital account
- Competitiveness
- Current account
- Current account deficit
- Exchange rates
- Expenditure-reducing policies
- Expenditure-switching policies
Using J-Curve Effect in the exam
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