Given the Following Indexes for Country I in 2012, with 2005

question 6

Essay

Given the following indexes for country I in 2012, with 2005 = 100:
$\begin{array} { l l } \text { price of exports } = 112 & \text { quantity of exports } = 94 \\\text { price of imports } = 108 & \text { quantity of imports } = 102\end{array}$
(a) Calculate country I's net barter or commodity terms of trade for 2012 (round to nearest one decimal place if necessary)..
(b) Calculate country I's income terms of trade for 2012 (round to nearest one decimal place if necessary)..
(c) Explain your differing results for (a) and (b) and briefly explain the significance of each terms-of-trade movement for country I.

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Definitions:

Market Risk Premium

The additional financial gain an investor looks to achieve by preferring a risk-laden market portfolio over risk-free investment options.

Expected Rate Of Return

The anticipated amount of profit or loss an investment is projected to generate based on historical or estimated future performance data.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual values in a data set differ from the mean.