Net Exports (X-M)

Spending on exports is included in aggregate demand as it contributes to economic activity in Australia, whereas imports are deducted from the other components of aggregate demand because they have an imported component within them, which provides economic activity overseas, not in Australia. Both exports and imports account for about 20 per cent of aggregate demand. A depreciation of the currency, by making exports relatively cheaper and imports more expensive, should promote domestic economic activity.

{C+I+G1+G2+(X-M)}=AD