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?
✓ Correct Answer
The correct answer is C: The terms of trade improved between years 1 and 2, and then remained unchanged between years 2 and 3.
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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