The commodity terms of trade measures
A) the rate at which exports exchange for imports.
B) the influence trade has on productivity levels.
C) the effect on income of the trading nation.
D) the improvement in a nation's welfare.

Question

Quizplus · Accepted Answer

Commodity terms of trade refers to the ratio of a country's export to import prices. In other words, it measures the rate at which a country can exchange its exports for imports. A rise in the commodity terms of trade indicates an increase in the relative price of exports, which can lead to an improvement in a country's welfare.

The Commodity Terms of Trade Measures