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In: Economics

Imagine you are an advisor to your government and that your economy faces a problem of...

Imagine you are an advisor to your government and that your economy faces a problem of declining terms of trade for its exports. Discuss the possible policy changes for the economy and any other strategies you would recommend to avoid declining terms of trade in the future.

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Expert Solution

To avoid declines in terms lf trade the government must impose Voluntary export regimes, trade embargoes amd tariff quotas. Also increasing import duties can also discourage higher surge in imports and balance terms of trade.

Also garnering competitive advantage, through tax sops for domestic workers can helpz create lowcost manufacturing in future and unleash economies of scale. Increased liberalisation of sectors and hedging against key risks helps firms in declines teems of trade.

Rahul Sunny answered 2 years ago
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