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

Terms of trade refers to the ratio of a country's average export price to its average import price, which is the correct definition given in option C. Absolute advantage refers to a country's ability to produce a good using fewer resources than another country, while comparative advantage refers to a country's ability to produce a good at a lower opportunity cost than another country. Exchange rate refers to the value of one currency in relation to another currency. Therefore, option C is the best choice as it correctly defines the given term.

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