The terms of trade is given by the prices:
A) Paid for all goods imported by the home country
B) Received for all goods exported by the home country
C) Received for exports and paid for imports
D) Of primary products as opposed to manufactured products

Question

Quizplus · Accepted Answer

The terms of trade refer to the ratio of export prices to import prices. Therefore, option C is the correct choice as it includes both exports and imports in determining the terms of trade. Options A and B are not complete because they only consider one side of the equation (imports and exports, respectively). Option D is not accurate as primary products are not necessarily the only products traded in determining the terms of trade.

The Terms of Trade Is Given by the Prices