Macroeconomics/Imports-Exports

From Wikibooks, open books for an open world
Jump to: navigation, search

To begin with, exports-important represents net exports or otherwise abbreviated as NX. If exports>imports then we have a trade surplus and therefore adds to the economies well-being (GDP). If Imports>Exports then we have a trade deficit. Since NX is exogenous to the variables in the keynesian cross, an increase or decrease in NX will be reflected by a parallel shift upwards (if we have a trade surplus) or parallel shift downwards (if we have a trade deficit).