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WAEC Economics 2012 Question 46

Question 46

International Trade

When there is improvement in a country's terms of trade, it means that the country's

  1. A.exports are cheaper relative to imports.
  2. B.imports are cheaper relative to exports.
  3. C.volume of imports has declined.
  4. D.volume of exports has declined.
Show the answer and explanation

Answer: B (imports are cheaper relative to exports.)

Explanation

An improvement means export prices rise relative to import prices, so imports become cheaper relative to exports.