Assume that, for a certain country in a given year, the index of import prices stands at 102, the index of export prices stands at 106. The terms of trade are (to the nearest whole number)

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A. 208
B. 104
C. 54
D. 4

Correct Answer: Option B

Explanation

Terms of trade = (Index of export prices/Index of import prices) x 100

(106/102) x 100

= 103.9
≈ 104

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