Assuming that the supply of exports and imports are perfectly elastic, at which combination of elasticities of demand for imports and exports would a 10 % fall in the value of a currency lead to a worsening of the trade account of a country’s balance of payments?

elasticity of demand for exports elasticity of demand for imports
A 0.5 0.25
B 0.5 0.5
C 1.0 0.75
D 1.0 1.0

Question

Assuming that the supply of exports and imports are perfectly elastic, at which combination of elasticities of demand for imports and exports would a 10 % fall in the value of a currency lead to a worsening of the trade account of a country’s balance of payments?

elasticity of demand for exports       elasticity of demand for imports 
A         0.5                                                   0.25
B          0.5                                                   0.5
C         1.0                                                    0.75
D         1.0                                                   1.0