By "terms of trade," we mean:

Question

Quizplus · Accepted Answer

Terms of trade refer to the ratio between export prices and import prices. This ratio determines the purchasing power of a country's exports in international markets and affects its economic growth and development. An increase in terms of trade indicates that a country's export prices have increased faster than its import prices, leading to an improvement in its trade balance and economic well-being. On the other hand, a decline in terms of trade implies that a country's import prices have risen faster than its export prices, leading to a deterioration of its trade balance and economic challenges.

By "Terms of Trade," We Mean