GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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export prices versus import prices
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debt owed by a government
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when a country is spending more on foreign trade than it is earning
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amount charged by a lender to a borrower for the use of their money
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rate at which the level of prices for goods and services are rising and purchasing is falling
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Detailed explanation-1: -Terms of trade are defined as the ratio between the index of export prices and the index of import prices. If the export prices increase more than the import prices, a country has a positive terms of trade, as for the same amount of exports, it can purchase more imports.
Detailed explanation-2: -A weaker domestic currency stimulates exports and makes imports more expensive; conversely, a strong domestic currency hampers exports and makes imports cheaper. Higher inflation can also impact exports by having a direct impact on input costs such as materials and labor.
Detailed explanation-3: -What Are Terms of Trade (TOT)? Terms of trade (TOT) represent the ratio between a country’s export prices and its import prices. TOT indexes are defined as the value of a country’s total exports minus total imports.
Detailed explanation-4: -If exports exceed imports then the country has a trade surplus and the trade balance is said to be positive. If imports exceed exports, the country or area has a trade deficit and its trade balance is said to be negative.
Detailed explanation-5: -To calculate the U.S. terms of trade index, take the U.S. all-export price index for a country, region, or grouping, divide by the corresponding all-import price index and then multiply the quotient by 100.