A country has favourable terms of trade when the prices of her

A country has favorable terms of trade when the prices of her exports rise relative to the price of her imports. In other words, when the price a country receives for the goods and services it exports increases more than the price it pays for the goods and services it imports, it has favorable terms of trade. This means the country is able to generate more revenue from its exports than it spends on its imports, leading to an overall improvement in its balance of trade and economic well-being.