Standard Terms of Trade

Standard Terms of Trade refer to the commonly accepted conditions and ratios that determine how goods and services are exchanged between countries or trading partners. Essentially, it outlines the price of one country's exports in relation to the price of its imports. A favorable terms of trade means a country can buy more imports for each unit of its exports, enhancing its economic position. Conversely, unfavorable terms imply a country must export more to afford its imports. Understanding these terms is vital as they impact international trade dynamics and a country's economic health.