About This Quote
The balance-of-payments theory forgets that the volume of foreign trade is completely dependent upon prices. This quote reminds us that everything we do and everything we make ultimately depends on prices. The price of iron ore is determined by its supply and demand. An increase in the supply of iron ore would decrease the price if demand remains constant, which means we can make more money by running more factories and producing more steel. Without prices, there would be no trade.
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