Multiple Choice
Suppose that originally the average price of Happy Island's exports was 180,and the average price of its imports was 120.Now,the price of its exports drops to 160,and the price of its imports drops to 100.What effect will this have on Happy Island's terms of trade?
A) There will be no change in the terms of trade.
B) The terms of trade have moved in Happy Island's favour.
C) The terms of trade have moved against Happy Island.
D) The terms of trade have both increased and decreased.
Correct Answer:
Verified
Correct Answer:
Verified
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