The external trade sector, also known as the international trade sector, refers to the exchange of goods and services between countries. The behavior of this sector can vary throughout the business cycle, which is the fluctuation of economic activity between periods of expansion and contraction.

During an economic expansion, the external trade sector tends to grow as demand for goods and services increases. This is because businesses have more resources to invest in foreign markets, and consumers have more disposable income to spend on imported goods. Additionally, the exchange rate of the domestic currency may be strong, making exports more competitive and attractive to foreign buyers.

During an economic contraction, the external trade sector tends to shrink as demand for goods and services decreases. This is because businesses may have to cut back on foreign investments and consumers may have less disposable income to spend on imported goods. Additionally, the exchange rate of the domestic currency may weaken, making exports less competitive and less attractive to foreign buyers.

Overall, the behavior of the external trade sector is closely linked to the overall health of the economy. A strong and growing economy tends to lead to a strong and growing external trade sector, while a weak and contracting economy tends to lead to a weak and contracting external trade sector.