What is Index of terms of Trade?
Answer:
the terms of trade index is the ratio (price of exports/price of imports). an avderse movement in the terms of trade means that the price of imports increases relative to the price of exports making the ratio smaller and the economy worse off because now it will need to export more in order to be able to afford the same amount if imports. an improvement in the terms of trade is when the price of exports increases relative to the price of imports making the ratio larger and the economy better off because now it doesnt need to export as much to afford the necessary imports.
It is the average of all the stocks in that group. It's a way to easily understand if those shares are going up or down and by how much. The original number is completely arbitrary.
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