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Goods made abroad that are purchased in the UK - any transaction that generates a negative monetary flow out of the UK e.g. money spent on iPhones or foreign holidays.

Below is a graphic that shows imports represent a leakage out of the circular flow of income/expenditure in an economy. This is because money flows from domestic residents to foreign companies that produce these imported goods.

Therefore imports negatively contribute to the aggregate demand curve and if imports increase due to a stronger pound sterling then it will cause the AD curve to shift inwards as net exports for a country falls as shown in the diagram below.

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