Which of the following is true of the terms of trade?

Question

Quizplus · Accepted Answer

The terms of trade are determined by the supply and demand factors of the market. This means that if a country's exports are in high demand, its terms of trade will improve and vice versa. It is not a legal limit on imports nor is it determined by agreements such as the General Agreement on Tariffs and Trade. The negotiation between trading partners can affect the terms of trade, making option D incorrect. Option E is also incorrect as different trading partners have different tastes and preferences, which can affect their terms of trade.

Which of the Following Is True of the Terms of Trade