ABSTRACT
US trade was dominant in the global economy from the Second World War to the 1970s. This chapter examines the spending affecting the US economy which is the net amount of spending flowing into the American economy from foreign countries. Net exports are the dollar value of exports minus the dollar value of imports. When exports are larger than imports, net exports are positive. A positive amount of net exports is called a trade surplus. Trade deficits occur when foreign goods and services are flowing into America, but money is flowing out of America. In most American expansions, the trade deficit has risen throughout the expansion. In most American recessions, the trade deficit has been reduced. The most basic cause of an increase in US exports is an increase in the aggregate income of the rest of the world. It is the rest of the world that buys American exports.
