A country has a trade deficit.Which of the following must also be true?
A)net capital outflow is positive and domestic investment is larger than saving
B)net capital outflow is positive and saving is larger than domestic investment
C)net capital outflow is negative and domestic investment is larger than saving
D)net capital outflow is negative and saving is larger than domestic investment

Question

Quizplus · Accepted Answer

A trade deficit means that a country is importing more than it is exporting, which implies that it is borrowing from abroad or receiving foreign investment. This results in a negative net capital outflow, and typically, domestic investment exceeds domestic saving.

A Country Has a Trade Deficit