When commodity exports suffer from highly variable prices that rise or fall significantly on a yearly basis, making it very difficult for developing countries to plan infrastructure projects, social services, or industrialization. This is a situation 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

Income volatility refers to the unpredictable fluctuations in income, which in the context of commodity exports, can significantly impact a country's ability to plan and finance long-term projects due to the uncertainty in revenue.

When Commodity Exports Suffer from Highly Variable Prices That Rise