The level of uncertainty will depend on several factors: the nature of the functional form used in the multivariate analysis; the type of econometric technique employed; the appropriateness of the statistical assumptions embedded in the model or technique; the comprehensiveness of the variables included in the analysis; and the accuracy of the data that are utilized. [...] In particular, the terms of trade (the ratio of export to import prices) and the real exchange rate (the ratio of traded to non-traded goods prices) can affect the volume of goods and services that can be purchased with real GDP. [...] The result arises because the magnitude of the terms of trade effect is proportional to the average share of imports and exports in nominal GDP, while the real exchange rate effect is proportional to the share of net exports. [...] The difference between real GDP and real GDI is important to understanding the well-being of individuals and the evolution of the domestic economy. [...] At this point the slope of the production possibilities frontier (PPF) is equal to the negative of the terms of trade and the negative marginal rate of substitution along the agent’s utility curve.
economics economy inflation gross domestic product exchange rate economic analysis import balance of trade index macroeconomics national accounts prices terms of trade gdp nominal gdp real exchange rate index (economics) nominal real real gross domestic product measures of national income and output