The ratio of a country's average export price to its average import price is
A)its absolute advantage.
B)its comparative advantage.
C)its terms of trade.
D)its exchange rate.

Question

Quizplus · Accepted Answer

The ratio of a country's average export price to its average import price is called its terms of trade. The terms of trade illustrate the amount of imports that can be obtained per unit of exports sold. A country's terms of trade are important for its economic growth and stability. A higher ratio of export prices to import prices increase a country's ability to import goods and services, improve living standards, and promote economic growth.

The Ratio of a Country's Average Export Price to Its