When nations continue to experience large and ever-growing trade deficits:
A)they will ultimately produce so much output that other countries will lose domestic jobs.
B)creditor nations will eventually stop taking IOUs and trade will cease.
C)their economy will automatically go bankrupt.
D)their currencies will eventually be worthless.

Question

Quizplus · Accepted Answer

Creditor nations may eventually become reluctant to continue financing a country's trade deficits, fearing that the debtor nation might not be able to repay its debts. This could lead to a cessation of trade as creditor nations refuse to accept more IOUs, seeking to mitigate their risk.

When Nations Continue to Experience Large and Ever-Growing Trade Deficits