Paper 2 · Exchange Rates and International Trade
A favourable movement in the terms of trade implies that the
Acurrency has been devalued.
Bprices of exports have increased.
Cvisible trade balance has improved.
Dbalance of payments has improved.
Explanation: A favourable movement in the terms of trade means export prices have risen relative to import prices, i.e. the prices of exports have increased relative to imports.
ZIMSEC Economics Paper 2, June 2009, Q22
