Which of the following could partially explain why the terms of trade of developing countries might deteriorate over time?
A) Developing-country exports mainly consist of manufactured goods.
B) Developing-country imports mainly consist of primary products.
C) Commodity export prices are determined in highly competitive markets.
D) Commodity export prices are solely determined by developing countries.

Question

Quizplus · Accepted Answer

Commodity export prices being determined in highly competitive markets can lead to a deterioration in the terms of trade for developing countries because these countries often rely on exporting primary commodities. In highly competitive markets, prices can be volatile and tend to decrease over time due to increased supply or reduced demand, negatively affecting the terms of trade for these countries.

Which of the Following Could Partially Explain Why the Terms