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Balance of Payments and Developing Economies:
It is well-known in development economics that UDCs invariably start as debtor economies. In the process of development itself, these economies have to import a great deal of capital goods, consumer goods, food and raw materials and spares and components. They also have to import some new technologies and, hence, the total exchange outgo cannot be matched by export earnings. But, it is expected that in a decade or two, as the new capital goods and technologies begin to become effective and their products are directed towards exports, export goods and services become competitive in cost and quality. In that case, the volume of exports expands and, in due course, begins to overtake imports. A developing economy then moves on from being a debtor economy to a balanced one in terms of BOP and, finally, becomes a creditor economy, exporting more than it imports and giving credit to buyers. Thus, from being a net debtor in the beginning, it becomes a net creditor in the end and, in fact, begins to invest abroad rather than have others lending to and investing in it.
Elasticity of Price Expectations (epe)
Mamun has a weakly income of 600 dollars. Price of chocolate is 5 dollar and price of potato is taka 10. Both are normal goods. Show the income and substitution effect for each of
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