Discuss the Extent to Which an Increase in Exports Will Improve an Economy's Macroeconomic Performance

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Exports are the trade of goods and services between international economies. The macroeconomic performance of a country is measured by unemployment rate, which is targeted at 2.5%; inflation rate, which is targeted at 2.0% plus or minus 1% on the CPI; a satisfactory position on the balance of payments; and a stable economic growth rate, targeted at 2.5%. It is clear that an increase in exports would have an effect on an economies macroeconomic performance as it is a factor (balance of payment), but the extent to which can improve an economies macroeconomic performance is dependant on many other conditions. An increase in exports, may improve the economic performance of an economy, as it would reduce unemployment (the amount of people willing and able to work, but not in work). If exports were to increase this would result in an increase in AD, as the balance of payment is a factor. The subsequent result of this increase in AD would mean an increase in supply, leading to an increase in the rate of employment, as firms are forced to take on more workers in order to fulfil demand. This means that the increase in exports would reduce specifically cyclical unemployment ( demand deficient unemployment). This is because the increase in exports would result in a increase in AD, hence curing the deficient demand. Furthermore, the cost of the formerly unemployed, i.e. job seekers allowance, could now be redistributed through government spending, further increasing AD, to be spent on education in order to cure structural unemployment (decline in certain industry), and increase long term economic growth. However, the extent to which an increase in exports may reduce unemployment is dependant upon the current rates of unemployment. For example, if employment rates are already very high, an increase in exports would have little to no effect, as frictional unemployment,
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