Answer :
Final answer:
Net exports are computed as the difference between a country's exports and its imports, which is crucial for calculating its GDP and understanding its trade balance.
Explanation:
Net exports are equal to exports minus imports. This calculation is included in a country's Gross Domestic Product (GDP) to account for the expenditure flows that are associated with the global economy. When we consider the demand for domestically produced goods, it is essential to include spending on exports—goods produced domestically and sold abroad—and subtract spending on imports—goods that are produced elsewhere but purchased by residents of the country. A positive net export value indicates a trade surplus, while a negative value indicates a trade deficit. Historically, in the United States, exports exceeded imports in the 1960s and 1970s, but since the early 1980s, the situation has reversed, leading to a trade deficit.
