Question

A country has favourable terms of trade when:____. multiple choice

a. the average value of its imports increases relatively more than does the average value of its exports.
b. the average volume of its exports decreases more than does the average volume of its imports.
c. the average price of its imports increases relatively more than does the average price of its exports.
d. the average price of its exports increases relatively more than does the average price of its imports.

Answer 1

A country has favourable terms of trade when the average price of its exports increases relatively more than the average price of its imports.

Step-by-step explanation:

A country has favourable terms of trade when the average price of its exports increases relatively more than does the average price of its imports. The correct option is (d) the average price of its exports increases relatively more than does the average price of its imports. This scenario implies that the country is able to sell its goods at a higher price while paying relatively less for what it imports, which could improve the country's trade balance and economic position.

It is important to note that favourable terms of trade are not solely about the balance between exports and imports volume-wise, but also about the relative prices and value of these transactions.