A country, Azania, has been experiencing instability in export and import flows and has its domestic budget tied to its export earnings. The following table reflects this export-import flows.

YearPxPmQx

20129694100

20139295196

a) Calculate Azania's net barter and income terms of trade for years 2012 and 2013.

b) Calculate the changes in net barter and incomes terms of trade for the years 2012 and 2013.

2.Explainwhateconomistsmeanby priceequalizationtheory.Inyourexplanationitis importanttodiscusstheimplicationsfor(a)incomedistributionbetweencountriesand(b)industrialstructurein tradeparticipatingcountries.