International Economic Organizations

If a country's import bill is high, she can encourage exports by___________

Answer Details

If a country's import bill is high, that means the country is spending more money on importing goods from other countries than it is earning from exporting its own goods to other countries. To encourage exports and reduce the trade deficit, the country can take several measures. One such measure is to allow its currency to depreciate. When a country's currency depreciates, its goods become relatively cheaper compared to other countries. As a result, other countries may be more willing to buy goods from that country, increasing its exports. Additionally, when the country's currency depreciates, its own citizens may also be more inclined to buy locally produced goods instead of imported goods because imported goods will become relatively more expensive. Allowing the country's currency to appreciate, on the other hand, would make its goods more expensive compared to other countries. This could lead to a decrease in exports and an increase in imports, exacerbating the trade deficit. Liberalizing importation could make it easier for foreign goods to enter the country, which could increase competition for local producers. This may lead to an increase in imports, but it may not necessarily encourage exports. Increasing taxes on all locally produced goods would likely decrease demand for those goods, leading to a decrease in production and potentially leading to higher unemployment. This measure would not encourage exports and would not necessarily reduce imports either.

Suppose the public expenditure as a percentage of GDP of four countries is shown in the table below

Which type of economy exists in these countries?

Answer Details

The type of economy that exists in these countries is Mixed economy.

A mixed economy is an economic system that combines elements of both market and planned economies. It includes both private and public sectors, and the government plays a significant role in regulating and defining the structure of the economy.

In the given scenario, the fact that the countries have different levels of public expenditure as a percentage of GDP indicates that the government plays a role in the economy and is involved in spending a portion of the national income.

While the exact percentage of public expenditure varies between the countries, the presence of any public expenditure suggests government intervention and regulation in the economy. This means that these countries have a mixed economy, where both public and private sectors coexist and contribute to economic activities.

The government's involvement can take various forms, such as funding public goods and services, implementing social programs, and regulating industries. The level of government intervention may vary, but the presence of public expenditure indicates that the government has an active role in shaping the economy.

Therefore, based on the information provided, it can be concluded that the countries mentioned in the table have a mixed economy.