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Explain four reasons for difference in terms of trade between countries.

      

Explain four reasons for difference in terms of trade between countries.

  

Answers


joseph
i. Nature of the commodity being exported: a country exporting primary products is likely to experience unfavorable terms of trade compared to another that exports finished / manufactured goods.

ii. Change in demand for country’s exports: increase in demand for a country’s export is likely to lead to favorable term of trade compared to another whose demand for its export has reduced.

iii. World economic orders: a country that is a member of world decision-makers in regard to price fixing, is likely to experience favorable terms of trade compared to a country that has not joined such a group

iv. Total quantity supply. A country exporting a commodity that is in short supply in the world market is likely to experience favorable terms in terms of trade compared to another country that exports a commodity that has excess supply in the world market.

v. Restriction by trade partner: A country exporting to a trading partner who has restricted its exports is likely to experience unfavorable terms of trade if it has not retaliated by restricting its imports from such a partner.

joseph rimiru answered the question on December 28, 2017 at 14:02


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