Editing Terms of trade (section)

==Definition==
Terms of trade (TOT) is a measure of how much imports an economy can get for a unit of exported goods. For example, if an economy is only exporting apples and only importing oranges, then the terms of trade are simply the price of apples divided by the price of oranges — in other words, how many oranges can be obtained for a unit of apples. Since economies export and import many goods, measuring the TOT requires defining [[Price index|price indices]] for exported and imported goods and comparing the two.<ref>{{cite web|last=Marshall|first=Reinsdorf|title=Terms of Trade Effects: Theory and Measurement|url=https://www.bea.gov/papers/pdf/measuring_the_effects_of_terms_of_trade_reinsdorf.pdf|work=working paper|publisher=BEA|date=October 2009}}</ref>

A rise in the prices of exported goods in international markets would increase the TOT, while a rise in the prices of imported goods would decrease it. For example, countries that export oil will see an increase in their TOT when oil prices go up, while the TOT of countries that import oil would decrease.