If a country's trade deficit declines, but it does not go into surplus, then:
A)its consumption must be rising relative to its production.
B)it must be selling fewer assets to foreigners.
C)it must be buying more assets from foreigners.
D)it must be producing more than it is consuming.

Question

Quizplus · Accepted Answer

A decline in a country's trade deficit, without moving into surplus, indicates that it is selling fewer assets to foreigners. This is because a trade deficit occurs when a country imports more goods and services than it exports, and financing this deficit often involves selling domestic assets to foreigners. A reduction in the deficit suggests an improvement in the trade balance, which could be due to increased exports, decreased imports, or both, rather than a change in asset purchases.

If a Country's Trade Deficit Declines, but It Does Not