4.1.4 - Terms of trade

Question 1

Terms of trade calculation

Answer 1

Question 2

Define the term ‘Terms of trade’

Answer 2

The terms of trade measure the price of a country’s exports relative to the price of its imports.

Question 3

How does terms of trade differ from balance of trade ?

Answer 3

Question 4

Factors influencing a country’s terms of trade

Question 5

What does an improvement of terms of trade mean ?

Answer 5

Question 6

What does a deterioration of terms of trade mean ?

Answer 6

Question 7

What factors influence trends of trade ?

Answer 7

• Exchange rate
• Price of raw material
• tariffs

Question 8

How does exchange rates affect terms of trade (a depreciation) ?

Answer 8

• Exchange rates is the price of one currency in terms of another.

Question 9

How does exchange rates affect terms of trade (a appreciation) ?

Answer 9

Question 10

How does Price of raw material terms of trade

Answer 10

Question 11

How does tariffs affect terms of trade

Answer 11

Question 12

What are the Impact of changes in a country’s terms of trade

Answer 12

• Living standards
• Competitiveness

Question 13

How is living standard an impact of changes in a countries terms of trade ?

Answer 13

Question 14

How is competitiveness an impact of changes in a countries terms of trade ?

Answer 14