Economics · International Trade Terms
The Prebisch–Singer hypothesis argues that developing countries face a long-run secular deterioration in their terms of trade. The primary mechanism cited is:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Rapid technological progress in primary commodity production in developing countries.
- 2Trade restrictions imposed by developed countries on manufactured imports.
- 3Low income elasticity of demand for primary commodities combined with higher elasticity for manufactures.✓
- 4Overvalued exchange rates maintained by developing country central banks.
Correct answer
Low income elasticity of demand for primary commodities combined with higher elasticity for manufactures.
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