If a nation's terms of trade is 2, its trade partner's terms of trade is :
In a two-country trade model, one nation's net barter terms of trade (\(P_x / P_m\)) is the reciprocal of its trading partner's terms of trade (\(P_m / P_x\)); thus if…
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If a nation's terms of trade is 2, its trade partner's terms of trade is :
Answer and explanation
Correct answer D
In a two-country trade model, one nation's net barter terms of trade () is the reciprocal of its trading partner's terms of trade (); thus if Nation A's TOT is , its partner's TOT is .
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