Question

The exchange ratio at which two countries trade their products is called the ______ of trade.

A. deficit
B. balance
C. terms
D. surplus

Answer 1

The terms of trade is the exchange ratio at which two countries trade their products.

Step-by-step explanation:

The exchange ratio at which two countries trade their products is called the terms of trade.

In international trade, the terms of trade refer to the price ratio between a country's exports and its imports. It represents the relative value of a country's exports in terms of its imports.

For example, if a country exports a large quantity of high-value goods and imports a small quantity of low-value goods, its terms of trade would be favorable. Conversely, if a country exports a small quantity of low-value goods and imports a large quantity of high-value goods, its terms of trade would be unfavorable.