Terms of trade refers to the rate of exchange of one good for another between two countries. It is determined by the ratio of export prices to import prices. It is the price of one country's exports in terms of its imports from another country. It is important for countries to have favorable terms of trade to maintain economic growth and development.

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Terms of Trade Is

Question 10

Multiple Choice

Terms of trade is

A) The marginal cost of producing one good for another
B) The marginal benefit of one producing one good for another
C) The rate of exchange of one good for another
D) The absolute advantage of production of two goods

Correct Answer: