Respuesta :
The terms of trade reflect the: ratio at which nations will exchange two goods.
How effective is Terms of trade?
According to a country's terms of trade, it is specified how many units of an imported good (or units of a bundle of imported goods) it receives for every unit of an exported good (or one unit of a bundle of exported goods). Because they show how many imported items the country receives for a specific bundle of exported commodities, the TOT can also be thought of as the nation's real exchange rate. A rise in the TOT indicates that the nation can sell its goods on the international market, earning more in import goods for each unit of export goods. Therefore, consumers abroad find domestic products to be so alluring that they are willing to pay an increasing price.
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