# 18) If, over a given period, the index of export prices rises by 10% and the...

###### Question:

18) If, over a given period, the index of export prices rises by 10% and the index of import prices rises by 5%, the terms of trade are: 110 x 100 / 105 = 104.8 This means that the terms of trade have improved by 4.8%. When the terms of trade rise above 100 they are said to be improving and when they fall below 100 they are said to be worsening. If a country's terms of trade improve, it means that for every unit of exports sold it can buy less units of imported goods.

A.) True

B.) False

0.25 points19) Using the scenario in question 18, if a country's terms of trade improve, it means that for every unit of exports sold it can buy more units of imported goods.

A.) True

B.) False

0.25 points20) According to the Prebisch-Singer hypothesis, this fate has befallen many developing countries given the general decline in commodity prices in relation to the price of manufactured goods.

A.) True

B.) False

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