Terbia is a closed economy, which has been growing at a very slow pace over the last decade. In order to boost economic growth, the government removed trade barriers earlier this year and increased its spending on the economy. These moves were expected to generate employment and increase economic growth. However, unemployment did not decline as much as expected. Which of the following, if true, can explain this outcome? A. Favorable weather conditions resulted in a bumper production of corn this year.

B. With liberalization of trade, the export market expanded and many domestic firms benefitted from it.

C. Imported varieties of many goods were cheaper than the domestically produced varieties.

D. Growth in the service sector of the economy was higher than growth in the manufacturing sector after the government took these measures.

E. Many firms expanded their capacities to cater to the higher demand.

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20 April, 16:49

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Cecelia Griffith · Answer 1

C. Imported varieties of many goods were cheaper than the domestically produced varieties.