students for leadership and management roles in various industries. It focuses on critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical
business program might cover topics like accounting
, ECS3702 Semester 2 Assignment 2 2025 -
Due 22 September 2025 students for leadership and management roles in various industries. It focuses on
critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover topics like accounting
1. Define Terms of Trade (TOT) [1 mark]
Terms of Trade (TOT) is the ratio of a country’s export prices to
its import prices. It indicates how many units of imports a
country can purchase per unit of exports. If export prices rise
relative to import prices, the TOT improves; if export prices fall
relative to import prices, the TOT deteriorates.
2. How is Terms of Trade measured [2 marks]
• It is measured using price indices. Specifically one
commonly used formula is:
TOTt=Pexports,tPimports,t×100 \text{TOT}_t =
\frac{P_{\text{exports},t}}{P_{\text{imports},t}} \times 100TOTt
=Pimports,tPexports,t×100
where Pexports,tP_{\text{exports},t}Pexports,t = export unit
value price index in year ttt, and Pimports,tP_{\text{imports},t}
Pimports,t = import unit value price index in year ttt.
• Indices are usually normalized to a base year (e.g. 100 in
the base year), so you can see how export/import price
relationships evolve over time.
business program might cover topics like accounting
, ECS3702 Semester 2 Assignment 2 2025 -
Due 22 September 2025 students for leadership and management roles in various industries. It focuses on
critical thinking, decision-making, problem-solving, and understanding organizational processes. A typical business program might cover topics like accounting
1. Define Terms of Trade (TOT) [1 mark]
Terms of Trade (TOT) is the ratio of a country’s export prices to
its import prices. It indicates how many units of imports a
country can purchase per unit of exports. If export prices rise
relative to import prices, the TOT improves; if export prices fall
relative to import prices, the TOT deteriorates.
2. How is Terms of Trade measured [2 marks]
• It is measured using price indices. Specifically one
commonly used formula is:
TOTt=Pexports,tPimports,t×100 \text{TOT}_t =
\frac{P_{\text{exports},t}}{P_{\text{imports},t}} \times 100TOTt
=Pimports,tPexports,t×100
where Pexports,tP_{\text{exports},t}Pexports,t = export unit
value price index in year ttt, and Pimports,tP_{\text{imports},t}
Pimports,t = import unit value price index in year ttt.
• Indices are usually normalized to a base year (e.g. 100 in
the base year), so you can see how export/import price
relationships evolve over time.
