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Describe How Balance of Trade and Balance of Payments Work

question 94

Essay

Describe how balance of trade and balance of payments work and define both terms.


Definitions:

Price Elasticity

An indicator of the sensitivity of demand for a product to variations in its price.

Relatively Inelastic

Describes a demand characteristic where a change in price leads to a smaller proportionate change in quantity demanded.

Excise Tax

A tax levied on specific goods, services, or transactions, often imposed on items such as alcohol, tobacco, and gasoline.

Price-Elastic Demand

The characteristic of demand for a good indicating that a change in price results in a relatively larger change in the quantity demanded.

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