A term-of-trade index that equals 90 indicates that compared to the base year,
A) it requires a greater output of domestic goods to obtain the same amount of foreign goods.
B) it requires a lesser amount of domestic goods to obtain the same amount of foreign goods.
C) the price of exports has fallen from $100 to $90.
D) the price of imports has fallen from $100 to $90.

Question

Quizplus · Accepted Answer

A term-of-trade index that equals 90 indicates that the value of exports relative to imports has decreased, meaning it requires a greater output of domestic goods to obtain the same amount of foreign goods.

A Term-Of-Trade Index That Equals 90 Indicates That Compared to the Base