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LeoGlossary: J Curve

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This is an economic theory that states a depreciation of a country's currency will increase its trade deficit. It operates on the assumption that the pace of decline in imports, by volume, will trail the increase in prices. Hence the near term impact will be a worsening of the deficit.

Over time, as the higher prices are felt, individuals and companies will adjust, moving away from the higher priced items to alternatives.

The visual of this path is a "J".

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