Question

Give below are two statements:

Statement - I: The terms of trade of a nation are defined as the ratio of the cost of its export commodity to the price of its import commodity.

Statement - II: The terms of trade of the trade partner are equal to the inverse of the terms of trade of the other nation.

In the light of the above statements, choose the correct answer from the options given below:

A Both Statement I and Statement II are true Correct Answer Incorrect Answer
B Both Statement I and Statement II are false Correct Answer Incorrect Answer
C Statement I is true but Statement II is false Correct Answer Incorrect Answer
D Statement I is false but Statement II is true Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

The terms of trade of a nation are defined as the ratio of the price of its export commodity to the price of its import commodity. The terms of trade of the trade partner are equal to the inverse of the terms of trade of the other nation.

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