passwella.
Menu

JAMB Economics 1991 Question 41

Question 41

International Trade

There is an improvement in the terms of trade of a country if

  1. A.a large quantity of exports is given up to obtain a unit of imports
  2. B.the volume of exports is greater than the volume of imports
  3. C.a smaller quantity of exports is given up to obtain a unit of imports
  4. D.the value of exports is greater than the value of imports
Show the answer and explanation

Answer: C (a smaller quantity of exports is given up to obtain a unit of imports)

Explanation

Terms of trade improve when export prices rise relative to import prices, so fewer exports buy the same imports.