If a country grows such that, at constant relative prices, the production of its export good Rises by 5 percent and the production of its import-competing good rises by 15 percent (and these are the only two goods produced in the economy), this production pattern Would be called __________ production effect.

Question

Quizplus · Accepted Answer

An "antitrade" production effect occurs when a country's production of export good increases less than that of its import-competing good, leading to a decrease in net exports and an increase in imports. In this case, the production of the export good has only increased by 5 percent, while the import-competing good has increased by 15 percent, indicating an increase in imports and a decrease in net exports.

If a Country Grows Such That, at Constant Relative Prices