A-LevelEconomicsInternational economic issues9708/12 · May/June 2018 · Q241 Mark
Country P exports goods and imports goods. Export prices and import prices are set to an index of 100 in year 1. The table shows corresponding prices indices for years 2 and 3. year 2 year 3 export price index 120 132 import price index 110 121 Which statement is correct?
AIt is not possible to say how the terms of trade changed without further information.
BThe terms of trade improved between years 1 and 2, and improved again between years 2 and 3.
CThe terms of trade improved between years 1 and 2, and then remained unchanged between years 2 and 3.
DThe terms of trade worsened throughout the whole period.
✓ Correct answer
C: The terms of trade improved between years 1 and 2, and then remained unchanged between years 2 and 3.
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