Sometimes developing countries that export simple commodities but are trying to industrialize need to import growing and costlier manufactured goods and technologies, which rise in value faster than commodities. This is known as ___________________.
A) declining terms of trade
B) income volatility
C) income elasticity of demand
D) purchasing power parity
E) stop-and-go patterns

Question

Quizplus · Accepted Answer

The correct term is "declining terms of trade." This phenomenon occurs when the prices of a country's exports grow more slowly than the prices of its imports, often seen in developing countries that export commodities while importing manufactured goods and technologies.

Sometimes Developing Countries That Export Simple Commodities but Are Trying