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    What would be the effect of a deteriorating trade balance on a country's real output and price level?
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    (Original post by dp00)
    What would be the effect of a deteriorating trade balance on a country's real output and price level?
    Fall in AD, fall in real GDP and price level.
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    As said, fall in AD and real GDP along with price level and this can be because of many things and it can cause spiral as AD can fall demand defecate unemployment will happen and a smaller work force will limit growth more and cause output to fall leading to fall in real GDP and it spirals on downwards, tending to lead to recession.
 
 
 
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