The terms of trade of developing countries might deteriorate over time due to several reasons:

A) Developing country exports consist mainly of manufactured goods: This is not typically a reason for the deterioration of terms of trade. In fact, exporting manufactured goods often leads to an improvement in the terms of trade as these goods usually have a higher value.

B) Developing country exports consist mainly of primary products: This could potentially lead to a deterioration in the terms of trade. Primary products often have lower value and are subject to price volatility in the international market. This can lead to a decline in the terms of trade over time.

C) Commodity export prices are determined in highly competitive markets: This could also lead to a deterioration in the terms of trade. In highly competitive markets, prices are often driven down, which can lead to a decline in the terms of trade for countries that are heavily reliant on commodity exports.

D) Commodity export prices are solely determined by developing countries: This is not typically the case. Commodity prices are usually determined by global market forces, not solely by the exporting country. Therefore, this is not likely to be a reason for a deterioration in the terms of trade.

E) Developing country exports are too diverse: This is not typically a reason for a deterioration in the terms of trade. In fact, having a diverse range of exports can often lead to an improvement in the terms of trade as it reduces reliance on a single commodity or product.

Therefore, the most likely reasons for a deterioration in the terms of trade of developing countries are B) Developing country exports consist mainly of primary products and C) Commodity export prices are determined in highly competitive markets.

Question

The terms of trade of developing countries might deteriorate over time due to several reasons:

A) Developing country exports consist mainly of manufactured goods: This is not typically a reason for the deterioration of terms of trade. In fact, exporting manufactured goods often leads to an improvement in the terms of trade as these goods usually have a higher value.

B) Developing country exports consist mainly of primary products: This could potentially lead to a deterioration in the terms of trade. Primary products often have lower value and are subject to price volatility in the international market. This can lead to a decline in the terms of trade over time.

C) Commodity export prices are determined in highly competitive markets: This could also lead to a deterioration in the terms of trade. In highly competitive markets, prices are often driven down, which can lead to a decline in the terms of trade for countries that are heavily reliant on commodity exports.

D) Commodity export prices are solely determined by developing countries: This is not typically the case. Commodity prices are usually determined by global market forces, not solely by the exporting country. Therefore, this is not likely to be a reason for a deterioration in the terms of trade.

E) Developing country exports are too diverse: This is not typically a reason for a deterioration in the terms of trade. In fact, having a diverse range of exports can often lead to an improvement in the terms of trade as it reduces reliance on a single commodity or product.

Therefore, the most likely reasons for a deterioration in the terms of trade of developing countries are B) Developing country exports consist mainly of primary products and C) Commodity export prices are determined in highly competitive markets.

Knowee AI · Accepted Answer

The terms of trade of developing countries might deteriorate over time due to several reasons:

A) Developing country exports consist mainly of manufactured goods: This is not typically a reason for the deterioration of terms of trade. In fact, exporting manufactured goods often leads to an improvement in the terms of trade as these goods usually have a higher value.

B) Developing country exports consist mainly of primary products: This could potentially lead to a deterioration in the terms of trade. Primary products often have lower value and are subject to price volatility in the international market. This can lead to a decline in the terms of trade over time.

C) Commodity export prices are determined in highly competitive markets: This could also lead to a deterioration in the terms of trade. In highly competitive markets, prices are often driven down, which can lead to a decline in the terms of trade for countries that are heavily reliant on commodity exports.

D) Commodity export prices are solely determined by developing countries: This is not typically the case. Commodity prices are usually determined by global market forces, not solely by the exporting country. Therefore, this is not likely to be a reason for a deterioration in the terms of trade.

E) Developing country exports are too diverse: This is not typically a reason for a deterioration in the terms of trade. In fact, having a diverse range of exports can often lead to an improvement in the terms of trade as it reduces reliance on a single commodity or product.

Therefore, the most likely reasons for a deterioration in the terms of trade of developing countries are B) Developing country exports consist mainly of primary products and C) Commodity export prices are determined in highly competitive markets.

Question

Solution

Similar Questions

Upgrade your grade with Knowee