Terms of trade,
Definition of Terms of trade:
The ratio of an index of a countrys export prices to an index of its import prices.
Not the contractual conditions of sale between a buyer and a seller, but the quantity of foreign goods and services (imports) that a country can purchase from the proceeds of the sale of its goods and services (exports) of a given quantity. It is a measure of a countrys trading clout and is expressed as the ratio of an index of export prices to an index of import prices. Terms of trade of a country improve when the prices of its exports rise in comparison with the prices of its imports, vice versa.
How to use Terms of trade in a sentence?
- The terms of trade were set between the two countries and things continued to flow smoothly over the next few days.
- Our terms of trade could get better, we just need to work on our pricing range, but our counter part may need to lower theirs a bit, too.
- A ratio comparing export prices to import prices, the terms of trade is related to current accounts and the balance of payments.
- You need to always know what the terms of trade are so that you can make sure to fully honor them.
Meaning of Terms of trade & Terms of trade Definition
