Question

What are the terms of trade in international trade?

Answer 1

• This refers to the rate at which the country’s export exchanges with those from other country. That is:
  Terms of trade = 
  price index of export
  price index of import 
• It determines the value of export in relations to import so that a country can know whether it’s trade with the other country is favourable or unfavourable
• Favourable terms of trade will make the country spent little on import andgain a lot of foreign exchange from other countries