Suppose that Country A (a small country) has exports of $40 million and imports of $50 million. As a result, Country A will funds from the rest of the world and engage in net foreign
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Question

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Country A has a trade deficit because its imports ($50 million) exceed its exports ($40 million). This means it will receive funds from the rest of the world to finance this deficit, resulting in net foreign borrowing.

Suppose That Country a (A Small Country) Has Exports of $40