CA Foundation · Business Economics · International Trade
Which of the following best describes the 'terms of trade' of a country?
Terms of trade is the ratio of a country's export prices to its import prices. It shows how many units of imports can be obtained for one unit of exports. A rise means the country gets more imports per unit exported. The trade balance is a different concept.
- AThe ratio of export prices to import pricesCorrect
- BThe total value of exports minus the total value of imports
- CThe tariff rates agreed between trading partners
- DThe share of exports in a country's GDP
Explanation
Terms of trade measure the rate at which a country's exports exchange for imports, commonly as the export price index divided by the import price index. Option B describes the trade balance, not the terms of trade.
Did you get it right without looking?
One question tells you little. A timed set on International Trade shows your real accuracy, how long you take and where you lose marks.
More International Trade questions
- Which of the following will be recorded as a debit item in the current account of India's balance of payments?
- Which of the following best describes a tariff in the context of international trade?
- Amrita Industries exports textiles to Bangladesh. The rupee appreciates against the Bangladeshi taka. In terms of international competitiven…
- According to the theory of comparative advantage, two countries can gain from trade when they differ in which of the following?
- India's balance of trade shows imports exceeding exports in a given quarter. Which of the following best explains what this indicates about …
- According to the theory of comparative advantage, a country should specialise in producing and exporting the good in which it has: