Definitions [2]
Define terms of Trade.
Terms of Trade:
The gains from international trade depend upon the terms of trade which refers to the ratio of export prices to import prices. It is the rate at which the goods of one country are exchanged for goods of another country’. It is expressed as the relationship between export prices and import prices. Terms of trade improve when average price of exports is higher than the average price of imports.
Definitions: Exchange Rate
- According to Anatol Murad, “The ratio at which one country's currency can be exchanged for another is the rate of exchange between these two currencies.”
- According to Haines, “Exchange rate is the price of one currency stated in terms of another currency.”
- According to Sayers, “The prices of currencies in terms of each other are called foreign exchange rate.”
- According to Crowther, “The rate of exchange measures number of units of one currency which is exchanged in the foreign market for one unit of another.”
