1.Reaching a trade agreement with many other countries2.An occurrence of hyperinflation in the country How would the long run economic growth (GDP) of the country be affected in each of the above cases? Briefly explain your answers.
1.Reaching a trade agreement with many other countries
2.An occurrence of hyperinflation in the country
How would the long run
Reaching a trade agreement with many other countries that means trade opens new markets and exposes countries to new goods and services that are unavailable in their domestic countries. Trade agreements may boost exports and growth, but the competition they bring is often damaging to small industries. Also, trade may be beneficial but if a country is importing more than it exports, then the growth is reducing as imports are subtracted from the GDP. In the long run, if exports > imports then only a trade agreement will bring economic growth otherwise not.
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