Shocks: the spring and damper assembly that bolts onto the vehicle between the suspension arm and strut tower sheet metal (under the hood on either side). Also referred to as coil-over shocks or simply coilover.
Strut: the piece of the suspension assembly that smooths out the suspension travel. This piece is better known as a damper in other countries such as Japan.
Spring: piece of the suspension that pushes the suspension arm back down. Also called coil spring.
Your car uses the normal spring and strut arrangement, like nearly every car does these days. The whole "shocks or struts" question is a misnomer thought up by mechanics years ago to confuse people into buying stuff they didn't need.
To diagnose your suspension, push down on one corner and let go. It should rebound and not bounce up and down. If it does, the damper (strut) is worn out. To test your springs, look carefully at the gap between the tire and wheelwell. If it looks like a riced honda with no gap, your springs are worn out. And considering the age of the vehicle, I would wager on the springs and struts both being at the end of their life. If that is the case, you might want to look into a proper set of adjustable coilovers. Fortunately, the Starlet and Tercel share suspension components for the same generation. I'm sure that Tein, Cusco or another good brand will have a set for your car. They do cost more than a spring/strut combo, but will pay off if you plan to take it out on the track. Otherwise, a set of KYB's AGX adjustable struts and any decent brand of springs will do nicely. Some of the better brands are Tein, Eibach, Koni and plenty more.
If you do a google search, you might get lucky and track down the Toyota Factory Service Manual for your car. It will go into detail about how the suspension is assembled and show you how everything goes together.
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