Explain how the terms of trade index is calculated and what it means
It is a ratio of prices received for exports over prices paid for imports and multiplied by 100 . The index
expresses prices received by a country as a percent of prices paid for its imports. Greater than 100 means
goods exported have a higher value than those imported which is generally judged to be good. There is a
potential for countries exporting high valued products to be able to compete more effectively in
international markets. This index is especially useful when looking at changes over time. Such changes
indicate whether a country's trade position is becoming better or worse. For example, an index that falls
from 100 to 75 indicates that a country's export product prices are only 75% of its import prices when they
used to be 100%—thus, in relation to the past, what it imports is relatively more expensive.
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Indicate whether the statement is true or false
Which of the following statements is false?
a. A decrease in the reserve ratio does not change the monetary base. b. Purchases of foreign currency by the central bank increase the monetary base. c. Discount loans to banks decrease a nation's monetary base. d. All are false. e. All are true.
Which of the following values of the Lerner Index indicates the greatest amount of market power?
A) 0.313.
B) 0.375.
C) 0.6.
D) 0.625.
The amount of the structural deficit is equal to the amount of tax revenue received minus federal expenditures for the current fiscal year.
Answer the following statement true (T) or false (F)