What is terms of trade give example?
Definition of. Terms of trade. Terms of trade are defined as the ratio between the index of export prices and the index of import prices. If the export prices increase more than the import prices, a country has a positive terms of trade, as for the same amount of exports, it can purchase more imports.
What are the types of terms of trade?
There are various types of terms of trade. These are the income terms of trade, the single factoral terms of trade and the double factoral terms of trade.
What are the two types of terms of trade?
Terms of trade are determined by looking at the two opportunity costs and choosing a number that falls between the opportunity costs in order for it to be beneficial to both countries. Acceptable terms of trade for this situation would be: 1 coal = 3 units of steel.
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