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Suppose Country X Is One of the Largest Exporter of Coffee

Question 21

Multiple Choice

Suppose country X is one of the largest exporter of coffee in the world. A recent massive cyclone has destroyed much of the coffee crop in country X and has considerably lowered its exports. Which of the following is a likely consequence of this disaster?


A) The size of country X's trade triangle will increase.
B) The price of coffee in the international market will decline.
C) The price of country X's imports relative to the price of its exports will increase unambiguously.
D) Country X's terms of trade will improve.

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