Calculate the commodity and the income terms of trade

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Question: 1. "If countries are behaving rationally, they should always be willing to export more at a higher export price. Thus, one would not expect to see ‘backward-bending' offer curves." Discuss.

2. You have the following information for a country for 2010, with all price indexes utilizing 2000 as the base year: The export price index is 120, the import price index is 130, the quantity index of exports is 115, and the quantity index of imports is 100. Calculate the commodity terms of trade and the income terms of trade for this country for 2010. Interpret your results.

Reference no: EM132177961

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