2.2.5: Net trade

• Net trade: Value of exports minus imports
• Trade surplus: Exports are greater than imports
• Trade deficit: Imports are greater than exports
• Net trade balance: Exports are equal to imports
• Factor influencing Net Trade: Increasing real income will increase imports, causing a Net trade deficit
• Factor influencing Net Trade: Depreciation in the exchange rate makes imports more expensive, increasing the Net trade balance
• Factor influencing Net Trade: Price competitiveness, or making products cheaper, will increase Net trade balance
• Factor influencing Net Trade: Non-Price competitiveness e.g Increasing quality and speed of delivery, increases net trade balance