When a country runs a trade deficit,
A) it must be running a budget surplus.
B) its imports will become injections instead of leakages.
C) its exports will become leakages instead of injections.
D) foreigners will demand loanable funds from the country.
E) foreigners will supply loanable funds to the country equal to its trade deficit

Question

Quizplus · Accepted Answer

When a country runs a trade deficit, it imports more than it exports, meaning it spends more on foreign goods than it earns from selling its goods abroad. To finance this deficit, it typically borrows from abroad, meaning foreigners supply loanable funds to the country.

When a Country Runs a Trade Deficit