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Net Trade

A country's net trade balance is the difference between the value of its exports and the value of its imports over a specific period, usually a year.

Aggregate Demand (AD) = Consumer Spending + Business Investment + Government Spending + Net Exports

Trade Surplus (Positive Net Trade Balance): A trade surplus adds to net exports, which in turn increases aggregate demand.

Trade Deficit (Negative Net Trade Balance): A trade deficit subtracts from net exports, leading to a reduction in aggregate demand.

See also

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