Gce Model Questions Vol1 2024 Economics Question 40

Practice objective / multiple choice question 40 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Medium Difficulty
Question 40 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

A country's export price index is 120 and its import price index is 150 (base 100). (a) Compute the current terms of trade (as an index). (b) The government introduces a tariff that raises the import price index by 10 %. Calculate the new terms of trade and the percentage change in the terms of trade.

Answer Options

A. Initial ToT = 80; after tariff ToT ≈ 78.00, a decline of about 2.5 %.
B. Initial ToT = 80; after tariff ToT ≈ 75.00, a decline of about 6.3 %.
Correct Answer C. Initial ToT = 80; after tariff ToT ≈ 72.73, a decline of about 9.1 %.
D. Initial ToT = 80; after tariff ToT ≈ 72.73, a decline of about 10.0 %.
Correct Answer
C
Correct Option:
Initial ToT = 80; after tariff ToT ≈ 72.73, a decline of about 9.1 %.

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 40. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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