An improvement in a country’s terms of trade means that the?

A. nation can export more services
B. nation’s receipts on export are equal to payments on imports
C. value of her imports is lower than her exports
D. visible exports is less than visible imports

Correct Answer:

Option C = value of her imports is lower than her exports

Explanation

Terms of trade measure the ratio between the index of export prices and the index of import prices. If a country’s terms of trade improve, it means that for every unit of exports sold it can buy more units of imported goods. This means its exports values exceed that of its imports.