1. Net Barter Terms of Trade: This type was developed by Taussig in 1927.The ratio between the prices of exports and of imports is called the “net barter terms of trade’. It is named by Viner as the ‘commodity terms of trade’.

It is expressed as:

T_n = (P x /P_m ) × 100

Where,

Tn = Net Barter Terms of Trade 

P_x = Index number of export prices 

P_m = Index number of import prices

This is used to measure the gain from international trade. If ‘Tn’ is greater than 100, then it is a favourable terms of trade which will mean that for a rupee of export, more of imports can be received by a country.

2. Gross Barter Terms of Trade: This was developed by Taussig in 1927 as an improvement over the net terms of trade. It is an index of relationship between total physical quantity of imports and the total physical quantity of exports.

T = (Q_m /Q_x ) × 100

Where, 

Q_m = Index of import quantities 

Q_x = Index of export quantities

If for a given quantity of export, more quantity of import can be consumed by a country, then one can say that terms of trade are favourable.