When there is improvement in a country's terms of trade, it means that the country's
Answer Details
When a country experiences an improvement in its terms of trade, it means that the prices of its exports have increased relative to the prices of its imports. In other words, the country can now purchase more imports with the same quantity of exports or receive a higher income for the same amount of exports. This can be beneficial to the country's economy because it increases the purchasing power of its exports and can lead to increased revenue and economic growth. Therefore, the correct option is that "exports are cheaper relative to imports" is not correct, while "imports are cheaper relative to exports" is not the answer either. The correct option is that "exports are more expensive relative to imports".