Terms of trade (TOT) represent the ratio between a country's export prices and its import prices.
TOT indexes are defined as the value of a country's total exports minus total imports. The ratio is calculated by dividing the price of the exports by the price of the imports and multiplying the result by 100.
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.
Terms of Trade (TOT) The relationship between how much money a country spends importing and how much money a country makes exporting. Expressed as a ratio of import to export prices. Equation: Terms of Trade (TOT) = Index of Export Prices / Index of Import Prices X 100 (Anything above 100 is referred to as improving).
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