The United States has run up a foreign trade deficit of hundreds of billions of dollars. Yet,nations are willing to trade with the U.S.through transfer of gold,foreign assets,and IOUs. This example demonstrates that:
A) Countries must have political stability and perceived economic security in order to receive deficit financing for international trade.
B) Countries with political stability and perceived economic security are more likely to receive deficit financing for international trade.
C) In the long run,not all nations are subject to the same economic rules.
D) Balance of payments must be maintained in the short run for all countries.
E) Balance of payments must be maintained for developing countries.
Correct Answer:
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