Although the price of oil and some commodities has increased in recent years, the price of most raw materials has declined. For countries that primarily produce raw materials, this development has led to which of the following?
A)Declining terms of trade
B)A rise in the terms of trade
C)Opportunities to rely on inexpensive labor
D)An increase in the export of raw materials

Question

Quizplus · Accepted Answer

Declining terms of trade occur when the prices of a country's exports fall relative to the prices of its imports. For countries primarily producing raw materials, if the price of most raw materials has declined while the price of oil and some commodities has increased, it means they are getting less for what they sell compared to what they buy, leading to declining terms of trade.

Although the Price of Oil and Some Commodities Has Increased