I n t h I s c h a p t e r y o u w I l L

trade balance.
If net exports are positive, exports are greater than imports, indi-
cating that the country sells more goods and services abroad than it buys from
other countries. In this case, the country is said to run a 
trade surplus.
If net
c l o s e d e c o n o m y
an economy that does not interact
with other economies in the world
o p e n e c o n o m y
an economy that interacts freely with
other economies around the world
e x p o r t s
goods and services that are produced
domestically and sold abroad
i m p o r t s
goods and services that are produced
abroad and sold domestically
n e t e x p o r t s
the value of a nation’s exports minus
the value of its imports, also called
the trade balance
t r a d e b a l a n c e
the value of a nation’s exports minus
the value of its imports, also called
net exports
t r a d e s u r p l u s
an excess of exports over imports

---

C H A P T E R 2 9
O P E N - E C O N O M Y M A C R O E C O N O M I C S : B A S I C C O N C E P T S
6 5 9
C A S E S T U D Y
THE INCREASING OPENNESS
OF THE U.S. ECONOMY
Perhaps the most dramatic change in the U.S. economy over the past five
decades has been the increasing importance of international trade and finance.
This change is illustrated in Figure 29-1, which shows the total value of goods
and services exported to other countries and imported from other countries ex-
pressed as a percentage of gross domestic product. In the 1950s exports of goods
and services averaged less than 5 percent of GDP. Today they are more than
twice that level and still rising. Imports of goods and services have risen by a
similar amount.
exports are negative, exports are less than imports, indicating that the country sells
fewer goods and services abroad than it buys from other countries. In this case, the
country is said to run a