The price indices of exports and imports, along with an index of the quantity exported are presented in Table 1 below for 1992 and 1993 for Mauritius. (Price indices for exports and imports are known as "unit value indices.")

Table 1: Export Unit Value Index, Import Unit Value Index,

and Quantity Exported Index

Export Unit

Value Index

Import Unit

Value Index

Quantity Exported Index

1992

108.7

102.1

100.0

1993

104.5

99.9

104.2

Source: Adapted from the IMF's, International Financial Statistics, April 1997.

a) Calculate the commodity terms of trade of Mauritius for the years 1992 and 1993.

(2 marks)

b) Comment on the meaning of the change in the commodity terms of trade from 1992 to 1993.

(2 marks)

c) Calculate the income terms of trade for the years 1992 and1993.

(2 marks)

d) Comment on the meaning of the change in the income terms of trade from 1992 to 1993.

(2 marks)

e)Explain why the commodity terms of trade can be expected to decline over time in developing

nations.(4 marks)