Which of these cases is an example of worsening terms of trade for a less developed country?
A)El Salvador signs a free-trade agreement with the United States that allows the United States to keep some tariffs on Salvadoran goods.
B)A group of foreign investors removes its money from Kenya because the government does not grant the group special concessions.
C)The price of Chilean copper decreases while the price of Japanese cars increases.
D)The amount of oil Nigeria can export decreases while the number of imported cars increases.

Question

Quizplus · Accepted Answer

C) The price of Chilean copper decreases while the price of Japanese cars increases. This scenario directly impacts the terms of trade by making exports cheaper and imports more expensive, effectively worsening the terms of trade for the less developed country (Chile in this case).

Which of These Cases Is an Example of Worsening Terms