A country has favourable terms of trade when the prices of her
-
exports rises relative to the price of her imports
- exports falls relative to the price of her imports
- imports rise faster than the prices of imports
- imports and exports move in the same direction
The correct answer is: A
Explanation
If the prices of a country's exports rise relative to the prices of its imports, one says that its terms of trade have moved in a favourable direction, because, in effect, it now receives more imports for each unit of goods exported.