Foreign Trade

Question 1

Define trade balance

Answer 1

The value of X and Z (X-Z)

Question 2

Define trade deficit

Answer 2

When imports exceed exports

Question 3

Define trade surplus

Answer 3

When exports exceed imports

Question 4

What is the import demand function

Answer 4

Z=A+zY

z=MPZ

Question 5

Define aggregate demand (open economy)

Answer 5

Y=c(0)+c(Y-NT)+I+G+X-A-zY
At equilibrium:
Y=(1/1-c+z)(c(0)-cNT+I+G-A)