With Other Things Unchanged, a Rise in the Average Price

question 145

Multiple Choice

With other things unchanged, a rise in the average price of imports or a
Fall in the average price of exports will:

• A)improve the terms of trade.
• B)worsen the terms of trade.
• C)expand the production possibilities frontier.
• D)contract the production possibilities frontier.

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Definitions:

Unequal Lives

A term used in capital budgeting to describe projects or investments with different durations.

Replacement Chain Method

A capital budgeting technique that compares different investment projects with unequal lifespans by calculating their equivalent annual cost.

Equivalent Annual Annuity

Equivalent Annual Annuity is a calculation used to compare the annualized cash flows of projects or investments with different durations.

Unequal Lives

Unequal lives refer to the comparison of investments or projects that have different durations or lifespans, complicating the analysis of their profitability or worth.