Lesson 4.1.4

4.1.4 Terms of trade Quiz: Pearson Edexcel Economics, Unit 4

20 questions

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Lesson 4.1.4, Terms of trade: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 4: Theme 4: A global perspective, written with Revision Ninja.

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The 20 questions

  1. What is the correct formula for calculating a country's terms of trade?

    • (Export prices / Import prices) × 100
    • (Import prices / Export prices) × 100
    • (Export volume / Import volume) × 100
    • (Import volume / Export volume) × 100

  2. If the export price index is 120 and import price index is 150, what are the terms of trade?

    • 80
    • 85
    • 125
    • 180

  3. Export prices rise by 5% and import prices rise by 10% from 100. What are the terms of trade?

    • 104.8
    • 95.5
    • 90.9
    • 105.0

  4. What term describes a fall in a country's terms of trade index from 100 to 90?

    • Deterioration
    • Appreciation
    • Improvement
    • Devaluation

  5. Which factor is most likely to improve a country's terms of trade index?

    • Currency depreciation
    • Higher import prices
    • Lower export demand
    • Higher export prices

  6. Which factor directly influences a country's terms of trade?

    • Government budget deficit
    • Domestic interest rates
    • Exchange rate changes
    • Income tax rates

  7. What is a primary consequence of a deterioration in a country's terms of trade?

    • Increased purchasing power
    • Higher export prices
    • Lower real incomes
    • Higher real incomes

  8. What is the primary effect on a country when its terms of trade deteriorate?

    • Better current account
    • Worse current account
    • Increased GDP growth
    • Higher export value

  9. What effect does a currency appreciation typically have on a country's terms of trade?

    • Deterioration
    • Devaluation
    • No change
    • Improvement

  10. How does a surge in global demand for a country's main export affect its terms of trade?

    • No change
    • Contraction
    • Deterioration
    • Improvement

  11. Why might an improvement in the terms of trade fail to benefit the current account?

    • Lower import prices
    • Rising exchange rate
    • Falling export volumes
    • Rising export prices

  12. If export price index is 110 and import price index is 95, what are the terms of trade?

    • 115.8
    • 105.3
    • 86.4
    • 120.0

  13. Export prices fall by 8% and import prices fall by 4% from 100. What are the terms of trade?

    • 95.8
    • 96.0
    • 92.0
    • 104.3

  14. If export prices reach 150 and import prices reach 125, what are the terms of trade?

    • 120
    • 115
    • 125
    • 83

  15. What impact does an improvement in terms of trade directly have on relative trade prices?

    • Higher export prices
    • Higher import prices
    • Equal trade prices
    • Lower export prices

  16. If export prices rise while import prices stay constant, what happens to the terms of trade?

    • It improves
    • It deteriorates
    • It stays constant
    • It fluctuates

  17. What does an improvement in a country's terms of trade increase?

    • Inflation rate
    • Tariff revenue
    • Import purchasing power
    • Export volume

  18. An export price index is 90 and import price index is 100. Calculate the terms of trade.

    • 9000
    • 90
    • 111
    • 100

  19. If export prices rise by 10% and import prices remain constant, what is the change in terms of trade?

    • Improves by 100%
    • Unchanged
    • Improves by 10%
    • Falls by 10%

  20. What does a terms of trade index value of 100 represent?

    • Base year value
    • Deterioration in trade
    • Maximum trade volume
    • Trade balance surplus

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