Question:
How can External Shocks lead to a Currenct Account Deficit?
Author: eric_galvaoAnswer:
-If the Price of Imported Raw Materials goes up, and Demand is Price Inelastic [Qd changes Less than Price] then it will Pay more in the Short Run -Economic Downturn in Nations to which another Exports too can mean the Exporter gets Less Exports -Trade Barriers on Goods means that Exports can suddenly Change
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