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In an open economy, that is an economy having contacts with other countries, we consider imports to be a leakage from the circular flow since they provide a demand for goods produced abroad.
Demand for exports is determined by conditions in foreign economies and some economists do not believe that exports depends on domestic income. However, there exists a relationship between exports and domestic aggregate demand.
Imports from other countries may be raw materials for domestic production or goods for direct consumption by households, such as a Japanese television set or a bottle of French wine. We expect demand for imports to rise when domestic income and output rise.