Chapter 6 - STM Flashcards
1
Q
What is Terms of Trade?
A
ratio of the price of exported goods over the price of imported goods.
2
Q
What is Terms-of-Trade effect?
A
Who gains and who loses from trade? Look at effect on welfare.
3
Q
What is immiserizing growth?
A
When biased growth is so large, its terms-of-trade line becomes so horizontal, its consumption possibilities are lower than before, resulting in a decr. of welfare
