Answer to Question #314576 in Macroeconomics for Shay

Question

Define terms of trade and explain how the terms of trade will be affected in south Africa by the increase in commodity prices

Answer 1

Terms of trade is the ratio between a country's export prices and it's import prices.

It represents the value of it's export as a percentage of the value of it's import.

Commodity price increase means an increase in the terms of trade for South Africa