What does the term 'terms of trade' signify?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

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The rate at which one currency is exchanged for anotherThe gap between the value of tangible exports and importsGovernment strategies aimed at boosting export levelsThe ratio at which a country's exports are traded for its imports

Explanation

Option A refers to currency exchange rates, which differ from terms of trade. Option B describes the trade balance of visible goods. Option C relates to export promotion policies. The correct definition, option D, is the rate at which exports are exchanged for imports, representing the terms of trade.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

What does the term 'terms of trade' signify?

Explanation

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