Country P exports goods and also imports goods. In year 1, both export prices and import prices are given an index value of 100. The table below gives the matching price indices for years 2 and 3. year 2 year 3 export price index 120 132 import price index 110 121 Which of the following statements is correct?
- AIt is not possible to say how the terms of trade changed without further information.
- BThe terms of trade improved between years 1 and 2, and improved again between years 2 and 3.
- CThe terms of trade improved between years 1 and 2, and then remained unchanged between years 2 and 3.
- DThe terms of trade worsened throughout the whole period.