If,over a period of a year,a country's import price index rises from 100 to 120 and its export price index rises from 100 to 110,its index for the terms of trade has

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The terms of trade index is calculated by dividing the export price index by the import price index and multiplying by 100. Therefore, the terms of trade index for this country would be (110/120)x100 = 91.67. This means that the country's terms of trade have fallen.

If,over a Period of a Year,a Country's Import Price Index