Analyzing Economic Data from a Commodity Price Shock
An economic analyst observes the following data for two countries, Country A and Country B, during a year when the global price of a key energy commodity doubled:
- Country A: The total value of its exports rose by 40%, while the total value of its imports rose by 10%. The country's national income grew substantially.
- Country B: The total value of its exports rose by 5%, while the total value of its imports rose by 30%. The country's national income stagnated, and consumers faced higher costs.
Based on this data, what is the most likely primary role of each country in the global market for this energy commodity (i.e., major exporter or major importer)? Explain the economic principle that accounts for the different outcomes in their national income.
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Figure 4.28: Gains and Losses in the Terms of Trade (2022)
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Analyzing Economic Data from a Commodity Price Shock
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