If there is a steady rise in the ratio of export to import prices for a country, it implies that:
A) the country is unable to fund its imports easily.
B) there has been an improvement in the terms of trade.
C) GDP growth has slowed down.
D) there has been a steady decline in the command GDP.

Question

Quizplus · Accepted Answer

An improvement in the terms of trade occurs when the prices of a country's exports rise relative to the prices of its imports. This means the country can buy more imports for any given level of exports, indicating an improvement in its trade conditions.

If There Is a Steady Rise in the Ratio of Export