In a Two-Commodity, Two-Country Trading World (As in the Offer

Multiple Choice

In a two-commodity, two-country trading world (as in the offer curve diagrams) , if, at a Given terms of trade (price of good X ÷ price of good Y) , there is an excess demand for Good X, then there must __________ and the price of good X relative to the price of good Y will therefore __________.

A) also be an excess demand for good Y; rise
B) also be an excess demand for good Y; rise, fall, or not change - cannot be determined Without more information
C) be an excess supply of good Y; rise
D) be an excess supply of good Y; fall