Term of trade is the

The term of trade refers to the ratio between the index of export prices and the index of import prices of a country. In other words, it is a measure of the value of a country's exports relative to its imports. It reflects the amount of imports that a country can purchase with a given quantity of its exports. A favorable term of trade means that a country can purchase a greater amount of imports for a given amount of its exports, while an unfavorable term of trade means that a country can purchase a lesser amount of imports for the same amount of its exports.