What four factors influence a country’s terms of trade?

Changes in Supply and Demand: If the global demand for a country's export goods increases, or if the supply of its import goods increases, the terms of trade will improve for that country. Conversely, if the global demand for a country's export goods decreases, or if the supply of its import goods decreases, the terms of trade will worsen.

Changes in Relative Inflation Rates: If a country's inflation rate is higher than that of its trading partners, its terms of trade will worsen because its exports will become more expensive and imports cheaper. Conversely, if a country's inflation rate is lower than that of its trading partners, its terms of trade will improve.

Changes in Exchange Rates: If a country's currency appreciates (i.e., increases in value relative to other currencies), its exports become more expensive and its imports become cheaper, which worsens its terms of trade. Conversely, if a country's currency depreciates (i.e., decreases in value relative to other currencies), its exports become cheaper and its imports more expensive, which improves its terms of trade.

Changes in Productivity: If a country becomes more productive in producing certain goods, it can produce and export more of these goods, which can improve its terms of trade. Conversely, if a country becomes less productive in producing certain goods, it may have to import more of these goods, which can worsen its terms of trade.