Question

5. The Netherlands primarily exports agricultural products, while importing raw materials such as natural gas, metal ores, and grains. Analyze the impact of the following events on the Netherland's terms of trade: a. Farm pollution in China is worsening. b. Egypt is planning to import large quantities of liquefied natural gas. c. Germany has a sustainable development strategy for raw materials and energy productivity d. OPEC's agreement with Russia cut oil production and pushing oil prices higher, e. A rise in Netherland's tariffs on imported iron and steel.

Answer 1

a) Farm pollution in China is worsening

As the farm pollution in China is worsening, so the agricultural output would be low in China and it relies more on import of agricultural products. So Netherlands exports more of agricultural products as the demand of agricultural products from China increases.

b)Egypt is planning to import large quantities of liquefied natural gas.

As Egypt is planning to import large quantities of Liquefied natural gas, so the demand of exports of natural gas from Netherlands incraeses and there would be high exports of natural gas from Netherlands.

c) Germany has a sustainable development strategy for raw materials and energy productivity.

As Netherlands imports raw materials, Germany's sustainable development strategy for raw materials increases the imports of raw materials by Netherlands from Germany.

d) OPEC's agreement with Russia cut oil production and pushing oil prices higher.

As oil price becomes higher, the price of natural gas also rises. So the demand of natural gas redcues leading to less imports of natural gas by Netherlands.

e) A rise in Netherland's tariffs on imported iron and steel.

Rise in Netherland's tariffs on imported iron and steel makes the iron and steel more expensive and thus less demand and less imports of iron and steel by Netherlands.