28. A terms-of-trade index that equals 150 indicates that compared to the base year of 100, a. it requires a greater output of domestic goods to obtain the same amount of foreign goods. b. it requires a lesser amount of domestic goods to obtain the same amount of foreign goods. c. the price of exports has risen from $100 to $150. d. the price of imports has risen from $100 to $150.

28. A terms-of-trade index that equals 150 indicates that compared to the base year of 100, a. it requires a greater output of domestic goods to obtain the same amount of foreign goods. b. it requires a lesser amount of domestic goods to obtain the same amount of foreign goods. c. the price of exports has risen from $100 to $150. d. the price of imports has risen from $100 to $150.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 1CQQ

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2.In a farway country, banana is the most important crop exported to rest of the world. Data about economic indicators for farway country are given in Table 1. Table 1: Macro Economic Indicators of Farway Country (all figures in million $) year Consumption Expenditure Investment Expenditure Government Expenditure Exports import 2012-13 100 20 50 60 70 2013-14 120 25 60 65 75 2014-15 140 30 70 65 78 2015-16 160 28 40 50 75 2016-17 165 25 30 45 75 2017-18 170 24 20 40 80 2018-19 170 20 20 35 80 In recent years, a life style change, leading to more consumption of processed food, than raw food has led to reduction in demand for Bananas for consumption. Since the manufacturing sector in FarwayCountry is not developed, the country has to import most of its processed food needs, leading to increase in imports.The Government of Farwaycountry is contemplating inviting foreign investors to establish industries to manufacture banana products such…
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