One of several conditions necessary for the possibility that a country might experience immiserizing growth is that the foreign demand for the country's exports must be priceMultiple choice question.elastic.inelastic.
Question
One of several conditions necessary for the possibility that a country might experience immiserizing growth is that the foreign demand for the country's exports must be priceMultiple choice question.elastic.inelastic.
Solution
The correct answer is "elastic." For a country to potentially experience immiserizing growth, the foreign demand for the country's exports must be price elastic. This means that a small change in price leads to a significant change in the quantity demanded. If the demand is inelastic, changes in price won't significantly affect the quantity demanded, making immiserizing growth less likely.
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