If a country's export prices rise relative to its import prices, its terms of trade generally:
Correct answer: A. Improve because exports buy more imports
- A. Improve because exports buy more imports
- B. Worsen because imports become cheaper
- C. Remain unchanged because quantities are fixed
- D. Disappear because trade is recorded in dollars
Explanation
Terms of trade are commonly measured as the ratio of export prices to import prices. An increase in this ratio means a given quantity of exports can purchase more imports.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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