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________.

Question

Quizplus · Accepted Answer

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