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How does output growth abroad lead to an increase in net exports?
1 Answer
- simplicitusLv 78 years agoFavorite Answer
No reason to believe that it does.
Over the long run you'd expect net exports to be 0. Richer countries trade more, but that means they tend to both export more and import more. That is, output growth abroad will tend to increase both their exports and imports and those of their trading partners too.
The current situation, with Germany and China being long tern net exporters and the U.S. being a long term net importer is not sustainable.
