CA Foundation P4 · Chapter 9 · Question 14 of 15
If the export price index rises from 100 to 120 and the import price index rises from 100 to 150 over a period, the net barter terms of trade:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Fall to 80, indicating a deterioration
Explanation
Net barter terms of trade = (export price index / import price index) x 100 = 120/150 x 100 = 80. A value below 100 means a unit of exports now buys fewer imports than in the base period, so the terms of trade have deteriorated.
More International Trade MCQs
- Q1The mercantilist doctrine held that a nation's wealth increases through:
- Q2The theory of absolute advantage as a basis for international trade was propounded by:
- Q3Labour hours required to produce one unit: Country X: cloth 10 hours, wheat 20 hours Country Y: cloth 15 hours, wheat 45 hours According…
- Q4According to the Heckscher-Ohlin theory, a labour-abundant country will:
- Q5An ad valorem import tariff of 15% is levied on a machine with an assessable value of Rs. 40,000. The tariff payable is: