The Effect of Trade Balance on National Income Growth Essay Example for Free

The Effect of Trade Balance on National Income Growth EssayEvery country wants to be Just an exporter of goods and services. But since no man is an island, no matter how much exports a country makes, it still has to import at some point.Using the case income identity, Y = National income or gross domestic product C = Consumption I = gross investment G = Government expenditure X = Exports and, M = Imports. From the equating above, the GDP of a country is dependent on consumption, investment, government spending and net exports. Other variables apart, this paper focuses on how exports and imports affect the GDP. Having a high GDP is the aim of every nation but having the right mix of exports and imports is the problem. Some countries live beyond their means by importing more than they export period some export more than they import.