Net trade
Exports minus imports (X − M).
Net trade
Key definitions
Trade balance
Balance of goods and services trade.
Currency appreciation
Currency rises in value vs other currencies.
Currency depreciation
Currency falls in value.
SPICED
Strong Pound Imports Cheaper Exports Dearer.
WPIDEC
Weak Pound Imports Dearer Exports Cheaper.
Protectionism
Tariffs, quotas, subsidies to favour domestic firms.
Interdependence
Partner countries' GDP affects your exports.
Non-price competitiveness
Quality, branding, reliability of exports.
Real incomes abroad
Higher foreign income raises demand for UK exports.
Key concepts
Net trade is often negative for UK — affects AD level.
Exchange rate changes affect X and M with time lags.
Relevant tips
- Use SPICED/WPIDEC mnemonics in evaluation.