Explain the reasons for export pessimism in Latin American ...

[segrsyd]

Explain the reasons for export pessimism in Latin American countries.
 
  What will be an ideal response?

Question 2

The U.S. current account deficit improved slightly from 2007 to 2010 because
 
  A) spending on imports fell due to an overall fall in consumption.
  B) state, local, and federal government budget deficits increased.
  C) worldwide economic growth spurred U.S. exports.
  D) capital controls restricted capital inflow.

[LVPMS]

Answer to Question 1

Export pessimism refers to the idea that the relative price of primary commodities will fall over time. Economic theory holds that as incomes rise, people spend a smaller share of their overall income on foodstuffs and other raw-material-based goods such as textiles and apparel, and they spend more on manufactured items. Consequently, the demand for raw materials declines in relation to the demand for manufactured goods.

Answer to Question 2

A