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    If there are only two countries in the world-Country A and Country B. And Country A is Developed country while as Country B is under-Developed Country.
    Country A is exporting to Country B and it also stops importing from country B.
    Q-1; What will happen to Country A and Country B?
    Q-2: What are the other possible outcomes that can happen in this situation?

    Also, Country B is paying to Country A in "Gold and Silver".
  • Answers

    4 Answers found.
  • The exchange of goods between two countries is basically governed by the factor that surplus goods of one country are to be exported to other and both get advantage out of this proposition to sell their excess merchandise to each other.

    Now in this example country A is disposing its goods to country B for the lucrative exchange of gold/silver while country B is simply diminishing its gold/silver and in that process will become internationally bankrupt.

    In old times there was barter system calling for goods for goods exchange. That survived a long time because of the inherent strength. On the contrary purchasing something with gold or precious metals will last a short life and will also be disastrous.

    Knowledge is power.

  • If a developed country is exporting to a country which is an underdeveloped country.
    Country A which is a developed country is not importing anything from Country "B". That means the foreign currency reserves which are there with Country B will diminish and still it has to import for Country A means this country has to give noble metals like silver and Gold in lieu of its imports. A day will come it will run out of these reserves and there will not be any further chance to import also. In this process country, A will become further rich and Country B will become poor and p[oorer.
    So the government of Country B should think of attaining self-sufficiency and put a ban on imports. They should also not go for any imports and see various options for becoming self-sufficient. Otherwise, a day will come County A will take over the rule of Country B also.

    always confident

  • Coutnry A is a developed nation that exports to Country B which is underdeveloped. No exports from Country B to Country A.

    Commonsense logic says that their would be a gross mismatch of trade and commerece.

    Country A - will exhaust its resources, the cost of exports and the items exported will go up. Industries and export houses will have a reduction in their profits. The cost of living in Country A will also go up as it's only 'earnings' is gold and silver.

    Country B - this will have the potential to become a developed country, if it changes it's payment plan from gold and silver to currency or other goods, as it will have benefits in the long run when the prices of its imports come down, imports become easy, it can have means to become self sufficient and reach a point where in its imports will come down and exports would start.

    The only drawback for Country B is its currency value and exchange price can be adversely affected as it is paying in Gold and Silver. If Country B is allowed to export to Country C, then it can overcome this fluctuation.

  • In the business world the balance of trade between two countries is a crucial thing for their economic performance. In this query country A is developed and exporting to B. Naturally country B has to pay for this in international currency. If country B is not exporting to country A due to whatever reason its foreign exchange resources will be under pressure and will diminish in no time.
    So the outcome of this proposition will be that country B will be on the mercy of country A and may seek loans from it and in this process may become highly indebted and its security will be threatened.
    The products and services of country B has no meaning if there is no takers for it in the global market which in this case is only country A.

    Thoughts exchanged is knowledge gained.

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