Suppose that there is an improvement in a country's terms of trade
Between 2010 and 2011.This improvement means that:
A)it can purchase more imports in 2011, with the same volume of exports as in 2010.
B)it can purchase more exports in 2011, with the same volume of exports as in 2010.
C)it needs to increase its exports in order to purchase the same volume of imports as in 2011.
D)regarding its international trade, it is worse off in 2011 than it was in 2010.

Question

Quizplus · Accepted Answer

An improvement in terms of trade means that the country is able to get a better price for its exports relative to its imports, therefore it can purchase more imports with the same volume of exports as before.

Suppose That There Is an Improvement in a Country's Terms