In a given trade period, Country X recorded an export price index of 150 and an import pri… — JAMB UTME

In a given trade period, Country X recorded an export price index of $150$ and an import price index of $120$ . What is the Net Barter Terms of Trade for Country X?

$125.0$ Answer
B
$80.0$
C
$130.0$
D
$180.0$

Answer

The Net Barter Terms of Trade for Country X is

125.0

The Net Barter Terms of Trade is defined as the ratio of the index of export prices to the index of import prices, multiplied by

100

. Substituting

150

for export prices and

120

for import prices gives

\frac{150}{120} \times 100 = 125.0

. A value above

100

indicates a favorable terms of trade.

Step-by-Step Solution

Identify the formula for Net Barter Terms of Trade

\text{Net Barter Terms of Trade} = \left( \frac{\text{Index of Export Prices}}{\text{Index of Import Prices}} \right) \times 100

The Net Barter Terms of Trade measures the relative price of exports in terms of imports.

Substitute the given values into the formula

\text{Net Barter Terms of Trade} = \left( \frac{150}{120} \right) \times 100

The export price index is

150

and the import price index is

120

Compute the final ratio

1.25 \times 100 = 125.0

Dividing

150

120

yields

1.25

, which multiplied by

100

gives an index of

125.0

Key Concept

Net Barter Terms of Trade

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