47974497 unit vi terms of trade
DESCRIPTION
Terms of TradeTRANSCRIPT
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Unit VI - Terms of trade
Day and Date:
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Unit Highlights…
Terms of trade
Factors affecting terms of trade
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Text book reference chapters…
International Economics by Dominick Salvatore – Chapter 4 & 11
International Economics by Francis Cherunilam – Chapter 7
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Terms of Trade…concept
Ratio of the price of its export commodity to the price of its import commodity.
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Terms of Trade…types
Commodity/net barter terms of trade Gross barter terms of trade Income terms of trade Single factorial terms of trade Double factorial terms of trade
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Terms of Trade…Commodity/net barter terms of trade
The ratio (expressed as a percentage) of relative export and import prices when volume is held constant.
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Terms of Trade… Gross barter terms of trade
The ratio (expressed as a percent) of a quantity index of exports to a quantity index of inputs.
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Terms of Trade…Income terms of trade
The ratio (expressed as a percent) of the value of exports to the price of imports.
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Terms of Trade… Single factorial terms of trade
Net barter terms of trade adjusted for changes in the productivity of exports.
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Terms of Trade… double factorial terms of trade
This adjusts for both the productivity of exports and the productivity of imports.
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Factors affecting Terms of Trade
Dependency on foreign sourcing Relative competitiveness in production PESTLE aspects of business environment -
intra-country and the rest of the world
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To conclude…
Economic efficiency is enhanced when nations engage in mutually beneficial exchange.
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You should now be able to,
Explain the concept and types of terms of trade.
Identify factors that determine favorable terms of trade.