Which of the following is the only way in which a current account deficit can be supported in the long run?
A) Borrowing from the IMF
B) Selling assets to foreigners
C) Divesting stock in domestic corporations
D) Purchasing stocks, bonds, and real estate in other countries
E) Issuing negotiable instruments like the bills of exchange

Question

Quizplus · Accepted Answer

A current account deficit means that a country is importing more goods and services than it is exporting, leading to a net outflow of money. In the long run, this deficit can only be supported by selling assets to foreigners, such as land and businesses. This may result in a loss of control for domestic firms and reduced future income streams, but it provides a way to finance the deficit without continuously borrowing or devaluing the currency.

Which of the Following Is the Only Way in Which