Question
Download Solution PDFThe term of trade refers to ______.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is the ratio between export prices and import prices.Key Points
- The term of trade is the ratio between the prices of a country's exports and the prices of its imports.
- It is an indicator of a country's economic performance in international trade.
- If the ratio improves, it means that a country can buy more imports with the same quantity of exports, which is favorable for its economy.
- In contrast, if the ratio deteriorates, it means that a country needs to export more to buy the same quantity of imports, which can be a challenge for its economy.
Additional Information
- Trade agreements are not the same as the term of trade, although they can affect it by influencing the demand for a country's exports or imports.
- Loan conditions are not related to the term of trade, although they can affect a country's ability to pay for its imports or to invest in its exports.
Last updated on Jul 15, 2025
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