Several economists have hypothesized that the terms of trade for
Developing countries will decline over time.Which of the following might
Be a cause of this decline?
A)Technological progress in manufactured goods has caused their prices to fall.
B)Some developing countries are able to keep the price of their exports high by restricting supplies on the world market.
C)Increased demand for developing country exports has caused prices of developing country exports to rise.
D)The demand for primary product exports from developing countries has not risen as fast as the demand for manufactured exports of
Industrialized countries.

Question

Quizplus · Accepted Answer

The hypothesis suggests that the terms of trade for Developing countries will decline over time, and the demand for primary product exports from developing countries has not risen as fast as the demand for manufactured exports of industrialized countries. Therefore, option D is the best choice as it explains this phenomenon. Options A, B, and C do not support the hypothesis as they suggest a rise in prices of exports or a fall in prices of other goods.

Several Economists Have Hypothesized That the Terms of Trade for