Relative productivity rates L.R

• What can continuous improvements in productivity lead to?

  Lower costs
• How can lower costs affect prices?

  They can lead to lower prices
• What is the effect of lower prices on export products?

  They can deteriorate terms of trade
• What does it mean when terms of trade deteriorate?

  Fewer imports can be bought with exports
• What happens to imports when export prices decrease?

  Fewer imports can be bought