"If We Observe That a Home Country's Volume and Terms

question 27

Essay

"If we observe that a home country's volume and terms of trade are both movingin the same direction (i.e., either both increasing or both decreasing), then we can surmise that the home country's offer curve is shifting. However, if we observe that the home country's volume and terms of trade are moving in opposite directions (i.e., one is increasing and the other is decreasing), then we can surmise that the foreign offer curve is shifting." Is this statement correct or incorrect? Illustrate and explain your answer. (Assume "elastic" offer curves throughout.)

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Definitions:

Divergent Thinking

A thought process or method used to generate creative ideas by exploring many possible solutions, often in a spontaneous, free-flowing manner.

Terman's Study

A longitudinal study conducted by Lewis Terman that began in 1921, tracking the development and characteristics of gifted children into adulthood.

IQ

Short for Intelligence Quotient, a score derived from standardized tests designed to assess human intelligence.

Concept

An abstract idea or a mental symbol typically associated with a fundamental characteristic of something.