What is the meaning of “Terms of Trade”? What are impacts of unfavorable terms of trade? Discuss.?

Question

What is the meaning of “Terms of Trade”? What are impacts of unfavorable terms of trade? Discuss.?

Answer 1

Terms of Trade. Simply put, is the price of exports divided by price of imports in a country. It shows the ratio of exports to imports. And how many imports a given quantity of their exports has the power to buy. Impacts of unfavourable terms of trade are that the balance on the current account will deteriorate.

Answer 2

Covenants and promises which facilitate agreements to exchange good and services are "Terms of Trade".  When trading partners or countries have products and services which are uniquely or favorably available for trade, details that enable or guaranty delivery, shipping, and payment are the "Terms".

Unfavorable "Terms" are agreements that grant an imbalance of exchange.  One trading partner having a monopolistic of oligopoly's advantage can issue or request unfavorable "Terms" to exploit the disadvantage of a trade agreement.

Industrial and technical nations can exploit developing nations by extracting valuable human and or mineral resources in exchange for items of lesser value not available developing nations.  The demands and needs of developing nations are simple in comparison to the complex desires of industrial and technical advanced societies.