Please I need help with this Question Thanks If a nation exp

Please I need help with this Question, Thanks.

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? Explain your answer in detail. MacBook Air ?0 F7

Solution

When we export some good, we get foreign exchange from the partner country. If we are trading with USA, we will get dollar in return from USA. This we can use for our personal use. Since we are importing less our balance of trade is positive and we gain resources for our country. this puts a pressure on our exchange rate as our foreign exchange reserve is increasing.

Intuitively, if we import more than our export, our foreign exchange reserve will go down. It will put pressure on our economy. Our trade balance worsens since imports exceeds the exports.