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Terms of trade adjustment (constant LCU) World Bank national accounts data, and OECD National Accounts data files. Terms of trade. A country’s terms of trade measures a country’s export prices in relation to its import prices, and is expressed as:. For example, if, over a given period, the index of export prices rises by 10% and the index of import prices rises by 5%, the terms of trade are: Terms of Trade = Price of Imports and Volume of Imports. Price of Exports and Volume of Exports. The terms of trade are of economic significance to a country. If they are favorable to a country, it will be gaining more from international trade and if they are unfavorable, the loss will be occurring to it.

We calculate the terms of trade as an index number using the following formula: Terms of Trade Index (ToT) = 100 x Average export price index / Average import  Calculation of Term of Trade (With Formula) To calculate index of export and import prices, we choose base year and the current period. A base period index  On the other hand, a fall in the terms of trade index indicates an unfavourable trend. This is because the prices of imports will have risen faster to that of exports. 9 Apr 2019 Terms of trade (TOT) represent the ratio between a country's export prices TOT measurements are often recorded in an index for economic  The terms of trade shows the relationship between export prices and import prices. For example, if, over a given period, the index of export prices rises by 10%  In this video, we explore how we can use opportunity costs to determine who has comparative advantage in producing a good. By specializing in the production  The formula below is used to calculate an economy's TOT: Terms of Trade (TOT) = Index of Export Prices / Index of Import Prices X 100. The indices are the