MCQ for Economics June 2006 Paper 1 Question 21

[arvind0708]

21 The table refers to a particular country.
year
index of import
prices
(2000 = 100)
index of export
prices
(2000 = 100)
1995 48.1 57.0
2005 122.4 120.8
Which statement about the period 1995 to 2005 is correct?
A The balance of trade improved.
B The balance of payments worsened.
C The terms of trade worsened.
D The exchange rate appreciated.

help

 

[Xenon]

Index of export and import are used for the purpose of terms of trade.
Using, Terms of trade(TOT) = (index of export/index of import)%
u will see the TOT has fallen which shows the TOT has worsened.