Terms of Trade Flashcards
(5 cards)
Terms of trade
an index which measures the relative movements in the prices of exports and imports ( value of X compared to the value of M)
favorable movement
increased SoL
value of XPI is relatively larger than MPI
terms of trade calculation
= XPI / MPI x 100
commodity definition
a basic good used in commerce that is interchangeable with other commodities of the same type. most often used as inputs in the production of other goods and services
effects of changes in the ToT
the business cycle output and UE trade, CAB and BOP exchange rate national income investment