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A-Level Economics · J-curve diagram question

Which point shows the current account back IN BALANCE?

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The diagram

The answer

Point C. T₂, point C — the J-curve crosses the zero line on its way up. Everything above that line is the surplus the depreciation was meant to deliver. Back in balance means the CURVE crosses the zero line: point C, at time T₂. Before T₂ the economy is still in deficit; after it, in surplus, heading towards E. Reading the zero line rather than the curve is the classic slip here.

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This is one of 6 questions on the j-curve diagram — every corner lettered, every wrong answer diagnosed.

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