Measurement of Terms of Trade - SS3 Economics Past Questions & Answers - page 1

1

How is the terms of the trade index calculated?

A

Index of export prices divided by index of import prices, then multiplied by 100

B

Index of import prices divided by index of export prices, then multiplied by 100

 

C

Index of export prices multiplied by index of import prices, then divided by 100

D

Index of import prices multiplied by index of export prices, then divided by 100

CORRECT OPTION: a
2

What do high terms of trade index indicate?

A

Favourable terms of trade 

B

Unfavourable terms of trade

C

No impact on a country's economy

D

A decrease in the cost of living

CORRECT OPTION: a
3

Why is the measurement of terms of trade important?

A

It helps assess a country's economic performance

B

It determines the number of imports a country can purchase

C

It predicts future changes in a country's exports 

 

D

It has no impact on a country's economic growth

CORRECT OPTION: a
4

What is the index of export prices?

A

The average price of goods a country exports

B

The total value of goods a country exports

C

The number of countries a country exports to

D

The cost of shipping goods between countries

 

CORRECT OPTION: a
5

What is the index of import prices?

A

The average price of goods a country imports 

B

The total value of goods a country imports

 

C

The number of countries a country imports from

D

The cost of exporting goods to other countries

CORRECT OPTION: a
6

What is the purpose of measuring terms of trade?

 

The purpose of measuring terms of trade is to assess a country's economic performance and identify trends over time.

7

How does a high terms of trade index impact a country's economy?

A high terms of trade index indicates favorable terms of trade, which can lead to an increase in a country's income and standard of living, supporting economic growth and development.

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