Question

Question 49 (Mandatory) (1 point) The terms of trade reflect the rate at which gold exchanges internationally for any domestic currency. ratio at which nations will exchange two goods. fact that the gains from trade will be equally divided. cost conditions embodied in a single country's production possibilities curve. Question 50 (Mandatory) (1 point) By requiring car producers to install emission control devices on cars, the government forces these producers to internalize some of the external costs of auto pollution. This will lead to the equilibrium price of cars decreasing and the quantity increasing. decreasing and the quantity decreasing. increasing and the quantity increasing. increasing and the quantity decreasing.

Answer 1

Question 49

The terms of trade reflect the

ratio at which nations will exchange two goods.

(Terms of trade are the predetermined rates or terms at which the goods of one country are exchanged with the goods of another country.It is the relationship between the price paid for imports and the price received for the exports.Terms of trade help to determine the value of commodity in the international market.The terms of trade index is calculated using the formula

Terms of Trade Index = 100*Average export price index/Average import price index.

When terms of trade improve,a country can buy more imports with the given quantity of exports.

When terms of trade deteriorate a country buys less imports with the given quantity of exports.

Question 50

By requiring car producers to install emission control devices on cars,the government forces these producers to internalize some of the external costs of auto pollution.This will lead to the equilibrium price of cars

increasing and the quantity decreasing.

(When the government forces car producers to install emission control devices on cars,it will lead to an increase in the cost of production of the car.As production of the car becomes costly,it will thus increase the equilibrium price of cars.Now with an increase in the price of the cars the quantity demanded will fall,thus it it will lead to equilibrium price of cars increasing and the quantity decreasing)