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

When exports are less than imports, it means that more money is leaving the country (outflow) than coming in (inflow). Therefore, Country A needs to borrow funds from the rest of the world to finance its trade deficit, which means it is engaging in net foreign borrowing. So, the correct option is C.

Suppose That Country a (A Small Country) Has Exports of $40