question... (1 Viewer)

[*Ninny-mole*]

Okay, I know this is dumb, but i'm not good at economics and need help with the terms of trade stuff. I know what it is, and how to figure it out, but I just don't know what to write for questions that ask you to describe the causes of an improvement/deterioration in the ToT, or the consequences of the improvement/deterioration in the ToT? I know it is a stupid thing to ask but I can't do it.

 

[onebytwo]

Okay, I know this is dumb, but i'm not good at economics and need help with the terms of trade stuff. I know what it is, and how to figure it out, but I just don't know what to write for questions that ask you to describe the causes of an improvement/deterioration in the ToT, or the consequences of the improvement/deterioration in the ToT? I know it is a stupid thing to ask but I can't do it.

an improvement or deterioration is caused by changes in export relative to import prices. e.g. in aust. out TOT would improve if prices for global g/s increase in relation to our import prices. our recent increases in our TOT is largely because of increasing global demand for commodities which has induced higher prices thus bigger TOT. the co0nsequences include improving external balances such as easing CAD and appreciation in the exchange rate etc
i think there was another thread not too long ago that discussed the TOT...check that out.