Suppose That Originally the Average Price of Happy Island's Exports

question 4

Multiple Choice

Suppose that originally the average price of Happy Island's exports was 180,and the average price of its imports was 120.Now,the price of its exports drops to 160,and the price of its imports drops to 100.What effect will this have on Happy Island's terms of trade?

• A)There will be no change in the terms of trade.
• B)The terms of trade have moved in Happy Island's favour.
• C)The terms of trade have moved against Happy Island.
• D)The terms of trade have both increased and decreased.

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Definitions:

Compensatory Order

A compensatory order is a legal direction to pay restitution, typically in civil litigation, designed to cover the loss or injury suffered by a plaintiff.

Equitable Remedies

Legal solutions given by a court based on fairness rather than strictly on laws, such as injunctions or specific performance.

Injunction

A court order requiring an individual or entity to do or cease doing a specific action.

Consequential Damages

Consequential damages refer to losses or harm that do not directly stem from a party’s actions but are a secondary result of those actions.