People sometimes worry that American trade with other countries will lead to large U.S.trade deficits and the movement of massive amounts of American capital out of the country.This worry is unfounded because countries cannot

Question

Quizplus · Accepted Answer

Countries cannot have both current account and financial account deficits at the same time because the balance of payments must always balance. The current account reflects a country's net income, including trade, while the financial account reflects changes in international ownership of assets. A deficit in one account is offset by a surplus in the other.

People Sometimes Worry That American Trade with Other Countries Will