Terms of Trade Flashcards
1
Q
Terms of trade
A
an index which measures the relative movements in the prices of exports and imports ( value of X compared to the value of M)
2
Q
favorable movement
A
increased SoL
value of XPI is relatively larger than MPI
3
Q
terms of trade calculation
A
= XPI / MPI x 100
4
Q
commodity definition
A
a basic good used in commerce that is interchangeable with other commodities of the same type. most often used as inputs in the production of other goods and services
5
Q
effects of changes in the ToT
A
the business cycle output and UE trade, CAB and BOP exchange rate national income investment
