If a nation exported much of its output but imported little

If a nation exported much of its output but imported little, would it be better or worse off? How about the reverse; that is, exporting little but importing a lot?

Solution

If we see in terms of GDP,

GDP = C + I + G + (X - M)

If there is more X and less M, then larger will be the GDP. So, the if a nation exported much of its output but imported little, it would be better off.

And reverse is the situation if there is more M and less X.