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International economics Questions 1.What explain the “ Prebish –Singer hypothesis? 2.   What kind of methods developing...

International economics Questions
1.What explain the “ Prebish –Singer hypothesis?

2.   What kind of methods developing countries can use to reverse the decline of their term of trade?

3.   How important is export instability, and , therefore, how important is the maintenance of buffer stocks?

4.   Illustrate graphically the economic effects of an export tax.


5.   Explain what the terms of trade argument for protection is about? Is this a valid argument?

6. Compare and contrast the “Washington consensus” and the “Beijing consensus” as strategies of economic development.

Homework Answers

Answer #2

1. In economics the prebish-singer hypothesis argues that the price of primary commodities decline due to the relative price of the manufactured goods over the long term , which causes the terms of trade of primary product based economies to detoriate. The thoery states that manufactured goods have a greater income elasticity of demand than primary products. In this case, as income rises, the demand for manufactured goods increases more rapidly than demand for primary products.

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