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# The terms of trade of a country is defined as

### Question

The terms of trade of a country is defined as

### Options

A)
$$\frac{\text{Index of import prices}}{\text{Index of export prices}}$$ x 100
B)
$$\frac{\text{Index of exportable}}{\text{Index of importable}}$$ x 100
C)
$$\frac{\text{Index of visible imports}}{\text{Index of visible exports}}$$ x 100
D)
$$\frac{\text{Index of export prices}}{\text{Index of import prices}}$$ x 100

The correct answer is B.

### Explanation:

Terms of trade (TOT) refers to the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices.

## Dicussion (1)

• Terms of trade (TOT) refers to the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices.