When a country's import price relatively rises to its export prices,
A)The terms of trade of a country remains the same
B)The terms of trade of a country becomes worsened
C)The terms of trade of a country improves
D)None of the above

Question

Quizplus · Accepted Answer

When a country's import prices rise relative to its export prices, its terms of trade worsen because it has to give up more exports to receive the same amount of imports.

When a Country's Import Price Relatively Rises to Its Export