Assume in base year 1995,the net barter terms of trade is equal to 100,and we find that,for the 2004 fiscal year,the US price index for exports has risen 8 percent and the price index for imports has fallen by 4 percent.What is the value of the U.S.net barter terms of trade?
A)63.4
B)101.2
C)88.6
D)112.5

Question

Quizplus · Accepted Answer

The net barter terms of trade is calculated as (Index of export prices / Index of import prices) * 100. Given that the export price index has risen by 8% and the import price index has fallen by 4%, the new export price index is 108 (100 + 8% of 100) and the new import price index is 96 (100 - 4% of 100). Therefore, the net barter terms of trade for 2004 is (108 / 96) * 100 = 112.5.

Assume in Base Year 1995,the Net Barter Terms of Trade