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Definition and formula

Definition and formula

Schematic showing the terms of trade formula, how improvement and deterioration work, and a worked example with export index 126 and import index 112

Exports are goods and services sold abroad, while imports are goods and services bought from abroad. Price indices compare current prices with a base year, and the base year is usually set to 100.

4.1.4 Terms of trade Lesson

  1. A Level
  2. /Economics
  3. /4.1.4 Terms of trade