If a country runs a trade deficit to finance increased current consumption, it will have to increase consumption in the future to pay back its borrowings.

Question

Quizplus · Accepted Answer

Running a trade deficit to finance increased current consumption means the country is importing more than it is exporting and borrowing to cover the difference. This does not necessarily mean it will have to increase consumption in the future to pay back its borrowings; it may instead need to increase its exports, decrease its imports, or find other ways to adjust its balance of payments.

If a Country Runs a Trade Deficit to Finance Increased