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The author of this article argues that the country of Sacchar can best solve its current trade deficit problem by lowering the price of its main export, sugar. The line of reasoning is that this action would make Sacchar more competitive with other sugarexporting countries, thereby increasing sales of Sacchar’s sugar abroad and, in turn, substantially reducing the tradedeficit. This line of reasoning is unconvincing for a couple of reasons. In the first place, this argument is based on an oversimplified analysis of the trade deficit problem Sacchar currently faces. A tradedeficit occurs when a country spends more on imports than it earns from exports. The author’s argument relies on the assumption that earnings from imports will remain constant. However, the author provides no evidence that substantiates this assumption. It is possible that revenues from imports will increase dramatically in the near future; if so, the course of action proposed by the author might be unnecessary to solve Sacchar’s trade deficit problem. Conversely, it is possible that revenues fro...
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This note was uploaded on 05/05/2009 for the course ECAS asdfasdf taught by Professor Asdfaf during the Spring '09 term at Academy of Art University.
- Spring '09