Definition
- Net exports
- Net exports are exports minus imports, so they add to aggregate demand when exports are larger and reduce it when imports are larger.
Example
Can you think of an example of net exports?
Buyers abroad spend £30 billion on UK goods and services, and UK residents spend £35 billion on goods made abroad. Net exports are £30bn − £35bn = −£5 billion, which pulls AD down.
Test yourself
Can you name the four components of aggregate demand?