A country's balance of payments deﬁcit is not likely to be a problem in the short run if the deﬁcit is due to the fact that it is purchasing high-productivity capital items.

Question

Quizplus · Accepted Answer

A country purchasing high-productivity capital items may lead to increased productivity and economic growth in the long run, which can help to offset the balance of payments deficit. Therefore, in the short run, the deficit is not likely to be a problem.

A Country's Balance of Payments Deﬁcit Is Not Likely to Be