Which of the following statements is true about terms of trade?

A. Terms of trade shows the difference between the values of export and imports
B. Terms of trade indicate the rate at which exports exchange for imports
C. It is the ratio of price index of exports to imports
D. It is usually expressed as percentage
E. A rise in the price of export relative to imports is an improvement

Correct Answer:

Option C – It is the ratio of price index of exports to imports