May anybody help me with this question, thanks! 3. The price indices of exports
ID: 1217631 • Letter: M
Question
May anybody help me with this question, thanks!
3. The price indices of exports and imports, and a quantity index of exports are contained in Table 8.1 below for various years for the country of Mauritius.
Table 8.1
Year
Export
Price Index
Import
Price Index
Export
Quantity Index
1992
1993
1994
108.7
104.5
107.4
102.1
99.9
105.3
100.0
104.2
105.1
Source: Adapted from the IMF's, International Financial Statistics, April 1997.
a) Calculate the commodity terms of trade of Mauritius for the years 1992-1994.
b) Comment on the meaning of the changes in the commodity terms of trade from 1992-1994.
c) Calculate the income terms of trade for the years 1992-1994. Set the 1992 income terms of trade equal to 100.
d) Comment on the meaning of the changes in the income terms of trade from 1992-1994.
Year
Export
Price Index
Import
Price Index
Export
Quantity Index
1992
1993
1994
108.7
104.5
107.4
102.1
99.9
105.3
100.0
104.2
105.1
Explanation / Answer
a) terms of trade for 1992= 108.7/102.1 = 1.06
terms of trade for 1993 = 104.5/99.9 = 1.04
terms of trade for 1994 = 107.4/105.3 = 1.02
b) Terms of trade is decreasing from 1992. Export prices are decreasing continously.