To what does the phrase terms of trade refer ?
Correct answer: D. the rate at which exports are exchanged for imports
- A. the currency exchange rate
- B. the difference between the value of visible exports and visible imports
- C. The government's policies to increase exports
- D. the rate at which exports are exchanged for imports
Explanation
Terms of trade measure the rate at which a country's exports exchange for imports, usually expressed through export prices relative to import prices. They do not mean the currency exchange rate or the trade balance.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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