When terms of trade is worsen for a country it's

Question

A)volume of exports increase more than it's volume of imports
B)imports prices increase more than it's export prices
C)volume of imports increase more than it's volume of exports
D) export prices increases more than it's import prices
Which option is true?

Answer 1

The correct answer is:

B) imports prices increase more than its export prices.

When a country's terms of trade worsen, it means that the country is receiving less value for its exports compared to what it has to pay for its imports. This typically occurs when import prices rise relative to export prices, thus negatively impacting the country's trade balance.