A country whose trade has almost no impact on world prices is at

QUESTION:

“A country whose trade has almost no impact on world prices is at great risk of immiserizing growth.” Do you agree or disagree? Why?


ANSWER:

Disagree. Immiserizing growth can occur if growth in the country leads the country to want to trade more, and the country’s terms of trade deteriorate by a large amount. If a country’s trade has almost no impact on world prices, then its growth will have almost no impact on its terms of trade, and immiserizing growth is very unlikely.

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