Question

In: Economics

In macroeconomic, are our imports or exports relatively (in)sensitive to our national income? Explanations please..

In macroeconomic, are our imports or exports relatively (in)sensitive to our national income?

Explanations please..

Solutions

Expert Solution

measurement of national income is a calculation under the branch of macroeconomics.now coming to the question,the concept of import and export are very crucial and sensitive in the national income.

  • when net export (export-import) is in positive value,then it represents that there is a surplus concerned with term of trade and country is exporting more goods and services in comparison with import of goods and services.this indicates that the economy is fundamentally strong and can fulfill its requirements at its own.it represents the self dependency.
  • but when net export (export-import) is in negative value then it represents that there is a deficit concerned with term of trade which implies that the country is importing more of goods and services that exporting the goods and services. this indicates that the economy is not strong and it can't fulfill its basic requirements at its own and it has to depend on some other countries for goods and services.

thus we can observe that import and export makes either positive or negative impact on the representation of national income.


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