• Net exports (trade balance): exports – imports
• Exports: goods and services that are produced domestically and sold abroad (to foreign
• Imports: goods and services that are produced abroad and sold domestically (to domestic
What affects the trade balance?
• Factors affecting the trade balance:
1. Tastes (foreign / domestic goods)
2. Prices (foreign / domestic)
3. Exchange rates
4. Income (foreign/domestic) Canadian income increases
5. Transportation costs
6. Government trade policies
When Canadian income goes up, no impact on exports, but imports goes up. This means net
exports go down.
When foreign income goes up, no impact on imports, but exports goes up. This means net exports
Which industry is the largest in terms of Canadian exports?
a) Energy products
b) Industrial machinery, equipment
c) Metals and minerals
d) Automotive products
e) Agricultural products
Answer:A) Energy products
Net capital outflow
• net capit