If prices of a nation's exported products rise in comparison with prices paid for imports, that nation experiences a:
A) rise in its international terms of trade.
B) decline in its international terms of trade.
C) reduction in its imports.
D) reduction in its exports.

Question

Quizplus · Accepted Answer

When the prices of a nation's exported products rise in comparison with prices paid for imports, the nation experiences a rise in its international terms of trade. This means that the nation is able to export more goods for the same amount of imports or import more goods for the same amount of exports, resulting in a favorable trade balance.

If Prices of a Nation's Exported Products Rise in Comparison