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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
Ravindra nath mahto
Assertion is absolutely right that income terms of trade is an indicator of capacity to import. Because higher the income means higher the ability to pay for imports and vice-versa. But the reason is wrong because income terms of trade is not calculated by multiplying the quantity of imports whereas we multiply the quantity of exports. The logic is simple behind the multiplication of exports instead imports because a country receives income by exporting not importing.