Question

what are terms of trade? what is meant by an improvement in the terms of trade?...

what are terms of trade? what is meant by an improvement in the terms of trade? what do changes in the terms of trade imply of the changes in economic welfare when trade restrictions are relaxed? discuss

Homework Answers

Answer #1

Terms of trade is the ratio of export price index and import price index.

An improvement in term of trade refers to the situation when a country's exports or value of exports in terms of value of imports increases.

Changes in terms of trade affect economic welfare. When there is an improvement in terms of trade, country's GDP rises because value of imports is lower than value of exports. When terms of trade worsens value is imports is greater than value of exports which leads to decrease in gdp and hence economic welfare.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is meant by the optimum tariff? What is its relationship to changes in the nation’s...
What is meant by the optimum tariff? What is its relationship to changes in the nation’s terms of trade and volume of trade?
4) What is meant by Integrative trade?
4) What is meant by Integrative trade?
Trade theory tells us to expect an improvement in a nation's trade balance (surplus) when the...
Trade theory tells us to expect an improvement in a nation's trade balance (surplus) when the real exchange rate depreciates. On what is that conclusion based? And why is it often not the case? Explain briefly.
Discuss 4 specific conclusions you can make about Trade Blocs. Explain your reasoning Explain what is...
Discuss 4 specific conclusions you can make about Trade Blocs. Explain your reasoning Explain what is meant by Regional Economic Integration in your own words.  
In class we discussed the “terms of trade” argument for a country’s imposition of a tariff....
In class we discussed the “terms of trade” argument for a country’s imposition of a tariff. What kinds of countries can (in theory at least) use a tariff to improve national welfare in this manner?
Action potentials are self-propagating – explain what is meant by this term in terms of action...
Action potentials are self-propagating – explain what is meant by this term in terms of action potential conduction down the axon? This question has to do with Animal Physiology.
What is meant by hydrostatic equilibrium? What does it imply about the conditions in the core...
What is meant by hydrostatic equilibrium? What does it imply about the conditions in the core of the Sun? Why must a star radiate energy when it undergoes contraction? How much energy must be radiated? How do we know that gravitational contraction is not the source of the Sun’s radiant energy today?
what is meant by technical traders? If a trade is exclusively a "technical trader" how much...
what is meant by technical traders? If a trade is exclusively a "technical trader" how much he view "efficient market"?
Define what is meant by a dominant mutation in A.) classical genetic terms and B.) biochemical...
Define what is meant by a dominant mutation in A.) classical genetic terms and B.) biochemical terms?
Select all that applies to define the meaning of Terms of Trade Terms of trade lies...
Select all that applies to define the meaning of Terms of Trade Terms of trade lies in each country's domestic opportunity costs in production. A country won't trade unless the terms of trade re superior to domestic opportunities, The terms of trade, like the price of any good, depend on the willingness of market participants to buy or sell at various prices The terms of trade do not determine how the gains from trade are distributed. 4 points    QUESTION...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT