If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.

Question

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The terms of trade measure the ratio at which a country can export one unit of a good in exchange for another unit of a different good. In this case, the United States exports 6 million bushels of corn and, using the income earned from this trade, imports 3 million digital video recorders from Japan. Therefore, the terms of trade for corn and digital video recorders are 2:1, meaning that the US can acquire one unit of digital video recorders for every two units of corn that it exports to Japan.

If the United States Exports 6 Million Bushels of Corn