1. Supply and Demand Analysis of Exports and Imports
Advanced Placement Macroeconomics
Yorktown High School
E.W. Breighton Underhill
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2. What are the determinants for the relationship between (X-M) ?
World Price
The interaction of world supply and demand determines world equilibrium price level.
Domestic Price
The interaction of domestic supply and demand determine the domestic equilibrium price level.

3. Equilibrium

4. What happens in the absence of trade…
To domestic prices?
To foreign prices?
International trade will provide countries the opportunity to import or export goods and services.

5. Graphing Tips
Graph the two countries individual domestic S & D side by side.
Use the Eq point as the beginning of the Export and Import Demand Graph.
You end at the max Qs and the max Qd as derived from the S & D graph
You plot your XM Graph from the Eq on the Y axis

6. Case Study for Aluminum
Reference Textbook
Chapter 35
McConnell, p