JAMB Commerce 2023 Paper

Concept:The rate at which a country's exports are exchanged for its imports is referred to as the terms of trade.Explanation:Terms of trade ($\mathrm{TOT}$) measures the relative value of a country's exports compared to its imports.It is calculated using the ratio of export prices to import prices.The formula is given as:$$\mathrm{TOT} = \frac{\text{index of export prices}}{\text{index of import prices}} \times 100$$Balance of trade refers to the difference between the monetary value of exports and imports.Balance of payments records all economic transactions between residents of a country and the rest of the world.Therefore, the correct description matches the definition of terms of trade.Answer:A. terms of trade