If the United States imports more goods from Japan than it exports to Japan, how will the difference be financed?

Question

Quizplus · Accepted Answer

If the United States imports more goods from Japan than it exports to Japan, the difference will be financed by selling assets, generating a liability that obligates Americans to pay for those imports in the future. This is because when a country imports more than it exports, it is running a trade deficit. To finance this deficit, it has to borrow money from other countries or sell assets to these countries. Therefore, the United States will have to sell assets, which could lead to an increase in its liabilities.

If the United States Imports More Goods from Japan Than