Which of These Cases Is an Example of Worsening Terms

question 41

Multiple Choice

Which of these cases is an example of worsening terms of trade for a less developed country?

• A)El Salvador signs a free-trade agreement with the United States that allows the United States to keep some tariffs on Salvadoran goods.
• B)A group of foreign investors removes its money from Kenya because the government does not grant the group special concessions.
• C)The price of Chilean copper decreases while the price of Japanese cars increases.
• D)The amount of oil Nigeria can export decreases while the number of imported cars increases.

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Definitions:

Comparative Advantage

The capacity of a party to generate a product or service with a smaller opportunity cost compared to its rivals.

TV Commercials

Short segments of television programming produced and paid for by organizations to convey marketing messages to viewers.

Capital

Financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the physical factors of production including machinery used to produce goods.

Resource

An economic or productive factor required to accomplish an activity, or to produce goods and services.