In a Two-Good,one-Period Model,when the Terms of Trade Move Against

question 25

Multiple Choice

In a two-good,one-period model,when the terms of trade move against you,

• A) exports unambiguously decrease and imports unambiguously increase.
• B) the effect on exports is uncertain and imports unambiguously decrease.
• C) the effect on exports is uncertain and imports unambiguously increase.
• D) the effects on both exports and imports is uncertain.
• E) exports and imports unambiguously increase.

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Definitions:

Surface Tension

Force that holds moist membranes together due to the attraction of water molecules through hydrogen bonds.

Water Molecules

The smallest unit of water (H2O), consisting of two hydrogen atoms covalently bonded to one oxygen atom, essential for most forms of life on Earth.

Hydrogen Bonding

A weak bond between two molecules resulting from an electrostatic attraction between a proton in one molecule and an electronegative atom in the other.

Ice

Water frozen into a solid state, typically at or below 0°C (32°F).