The terms of trade of a country is defined as

  • A \(\frac{\text{Index of import prices}}{\text{Index of export prices}}\) x 100
  • B \(\frac{\text{Index of exportable}}{\text{Index of importable}}\) x 100
  • C \(\frac{\text{Index of visible imports}}{\text{Index of visible exports}}\) x 100
  • D \(\frac{\text{Index of export prices}}{\text{Index of import prices}}\) x 100
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The correct answer is D. \(\frac{\text{Index of export prices}}{\text{Index of import prices}}\) x 100

Terms of trade (TOT) refers to the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices.

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