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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