kaupmáttarhugmyndinni
The kaupmáttarhugmyndin, or terms of trade in English, refers to the ratio of a country's export prices to its import prices. It is a key indicator of a nation's economic health and its ability to purchase goods and services from abroad using the revenue generated from its exports. A favorable terms of trade occurs when export prices rise relative to import prices, meaning a country can buy more imports for the same amount of exports. Conversely, unfavorable terms of trade occur when export prices fall relative to import prices, requiring more exports to purchase the same volume of imports.
This concept is particularly relevant for countries that heavily rely on the export of a few primary