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JAMB Commerce 2013 Question 10

Question 10

Foreign Trade

A country's terms of trade are said to improve when the ratio of her export

  1. A.decreases.
  2. B.remains constant.
  3. C.increases.
  4. D.equals import.
Show the answer and explanation

Answer: C (increases.)

Explanation

Terms of trade = export prices ÷ import prices; when this ratio rises, each unit of exports buys more imports.