Determining the impacts in terms of trade from various situations

Japan primarily exports manufactured goods, while importing raw materials such as food and oil. Analyze the impact on Japan's terms of trade of the following events:

a. A war in the Middle East disrupts oil supply.

b. Korea develops the ability to produce automobiles that it can sell in Canada and the United States.

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...rld oil price. The war in the Middle East will reduce the total oil output thereby reducing oil export, which will raise oil prices. While prices of Japan's manufactured goods remain ...