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The shape of the curve that shows the effect of currency depreciation upon a country's current account balance over time, with the curve itself being known as the , reflects the fact that short-run demand elasticities are sufficiently than long-run elasticities to generate this particular shape. (Ignore the negative sign on the elasticities.) J curve; lower J curve; higher supply curve of foreign exchange; lower supply curve of foreign exchange; higher 4. (1) If country A depreciates its currency against country B's currency, then, other things equal, there should be "expenditure switching" towards A's goods by residents of both countries. there should be "expenditure switching" towards A's goods only by A's residents. there should be "expenditure switching" towards B's goods by residents of both countries. B's goods become cheaper to country A's residents. 5. (1) Balance of payment (BOP) data may be important for any of the following reasons: BOP data helps to forecast a country's market potential, especially in the short run. The BOP is an important indicator of a country's foreign exchange rate. Changes in a country's BOP may signal a change in controls over payment of dividends and interest. All of the above