Explain why less-developed countries don't gain as much from trade as do industrialized nations
LDC exports, which are typically agricultural, trade in highly competitive markets, where technological
progress has tended to increase supply, driving down agricultural prices. Meanwhile, prices of their
principal imports (which are manufactured goods) have risen, due to increased demand. As export prices
have fallen and import prices have risen, LDCs' gains from trade diminish.
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Economic profits and losses are true market signals because they
A) convey information in an asymmetrical fashion. B) convey information about rewards people should anticipate experiencing by shifting resources from one activity to another. C) convey information to public officials about where to encourage people to invest and what skills people should develop. D) cause people to move into careers in both undesirable and desirable industries with equal ease.
When the Fed raises the required reserve ratio, it:
a. lowers the cost of borrowing from the Fed, encouraging banks to make loans to the general public. b. raises the cost of borrowing from the Fed, discouraging banks from making loans to the general public. c. increases the amount of excess reserves that banks hold, encouraging them to make loans to he general public. d. increases the amount of excess reserves that banks hold, discouraging them from making loans to the general public. e. decreases the amount of excess reserves that banks hold, discouraging them from making loans to the general public.