Question

According to M L Jhingan "International Economics" How Change in Taste Effect Terms of Trade?

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Answer 1

According to M L Jhingan "International Economics" , consider a case where there are two countries, England and Germany where englanders exporting cloth and Germany is exporting linen and in this regard if people of England change their taste to their own clothes then the demand for imported product will fall with which the terms of trade of England would actually improve on the whole and similarly the terms of trade will decrease if the case is reverse where the people taste towards linen increase.