Question

Discuss the implications of rising prices of natural resources.

Answer 1

For the past few years, the prices of natural resources have been rising at an increasing rate. There are a number of reasons for this phenomenon; however one main factor has been the rapid economic growth of developing countries. Natural resources are often perceived as a necessary and highly addictive energy commodity for the global economy. Thus an increase in the price is prone to affect both sides of the market.

When a nation is facing a decline in consumer prices driven by the weakness of household demand together with an increase in the prices of natural resource driven by significant economic growth among the developing countries, it has basically found it necessary for the manufacturing sector to absorb the impact of the rise in input cost. Similarly when a nation is facing an increase in consumer prices, the buyer to absorb the impact of the rise in input cost