1) If the ratio of price of cloth (PC) divided by the price of food (PF) increases in theinternational marketplace, thenA) all countries would be better off.B) the terms of trade of cloth exporters will improve.C) the terms of trade of food exporters will improve.D) the terms of trade of all countries will improve.E) the terms of trade of cloth exporters will worsen.

4) Suppose that a country experiences growth strongly biased toward its export, clothA) this will tend to worsen the country's terms of trade.B) this will tend to improve the country's terms of trade.C) this will tend to leave the country's terms of trade unchanged.D) this will tend to worsen the terms of trade for the country's trading partner.E) this will increase the price of cloth relative to the imported good.

5) Suppose that a "small country" experiences growth strongly biased toward its export, clothA) this will tend to worsen the country's terms of trade.B) this will tend to improve the country's terms of trade.C) this will tend to worsen terms of trade for the country's trading partner.D) this will tend to improve terms of trade for the country's trading partner.E) this will have no effect on terms of trade for the country's trading partner

Given the information in the table above, if the Home economy suffered a meltdown, and theUnit Labor Requirements doubled to 20 for cloth and 40 for widgets then home shouldA) export widgets and import cloth.B) export cloth.C) export widgets.D) export both and import nothing.E) export and import nothing.6. Trade between two countries can benefit both countries ifA) each country enjoys superior terms of trade.B) each country has a more elastic demand for the imported goods.C) each country has a more elastic supply for the exported goods.D) each country produces a wide range of goods for export.E) each country exports that good in which it has a comparative advantage.

When the terms of trade risesGroup of answer choicesThe relative prices of export goods decreaseConsumers who prefer foreign goods are better off.The price index of import goods increasesThe country is unambiguously worse off

Multiple Choice QuestionA country experiences a trade surplus under which of the following conditions?Multiple choice question.When it imports more goods and services than it exportsWhen it exports more services than it does goodsWhen it exports more goods and services than it importsWhen it exports more goods than it does services