Net Exports
Net exports (X - M) equals exports minus imports. Positive net exports (exports exceed imports) contribute to AD; negative net exports (imports exceed exports) reduce it. Net exports depend on exchange rates, relative prices, and foreign demand.
Real World
After the pound fell 10% following the June 2016 Brexit referendum, UK exporters like Burberry saw overseas revenues rise in sterling terms, while import prices for food and fuel increased for consumers.
Exam Focus
Always state the direction of both exports AND imports when analysing exchange rate changes — incomplete analysis loses evaluation marks.
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