Explain How a Global Downturn Could Cause Balance of Payment

question 19

Essay

Explain how a global downturn could cause balance of payment problems in a country that exports commodities.

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Definitions:

Deadweight Loss

An economic inefficiency resulting from a market not reaching equilibrium, where potential gains from trade are not fully realized.

Demand

It represents the quantity of a good or service that consumers are willing and able to purchase at various prices.

Supply

The total amount of a product or service that is available to consumers.

Elastic

Describes a situation where the demand for a good or service significantly changes in response to a change in price.