The terms of trade between two countries refer to
A. The terms set by the World Trade Organization for trade.
B. The rules governing trade between the two countries.
C. The amount of good A given up for good B.
D. What price the two countries agree upon for their imports and exports.
Answer: C
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Which of the following is a true statement about the multiplier?
A) The multiplier is a value between zero and one. B) The smaller the MPC, the larger the multiplier. C) The multiplier rises as the MPC rises. D) The multiplier effect does not occur when autonomous expenditure decreases.
After full adjustment to a price change has occurred, the absolute price elasticity of demand for an item is equal to 1. In the short run, the absolute price elasticity of demand for the item was probably
A) less than 0. B) greater than 0. C) less than 1. D) greater than 1.
Suppose this is a repeated game where the firms adopt a trigger strategy. What would the trigger strategy look like?
a. Charge low prices until he charges a high price, and then match b. Charge high prices until he charges a low price, then match c. Charge a high price till he charges a high price, then charge a low price d. Charge a low price till he charges a low price, then charge a high price
When the tax rates imposed on the rich are high, a reduction in these rates
a. will always lead to a reduction in the tax revenue collected from the rich. b. will not affect the tax revenue collected from the rich. c. will increase the reported incomes of the rich and it may also lead to an increase in tax revenue collected from them. d. will decrease the reported incomes of the rich, and thereby reduce the tax revenue collected from them.