Principles of Macroeconomics for AP® Courses

Principles of Macroeconomics for AP® Courses9.6 The Difference between Level of Trade and the Trade Balance

### Learning Objectives

By the end of this section, you will be able to:

• Identify three factors that influence a country's level of trade

A nation’s level of trade may at first sound like much the same issue as the balance of trade, but these two are actually quite separate. It is perfectly possible for a country to have a very high level of trade—measured by its exports of goods and services as a share of its GDP—while it also has a near-balance between exports and imports. A high level of trade indicates that a good portion of the nation’s production is exported. It is also possible for a country’s trade to be a relatively low share of GDP, relative to global averages, but for the imbalance between its exports and its imports to be quite large. This general theme was emphasized earlier in Measuring Trade Balances, which offered some illustrative figures on trade levels and balances.