If a country runs a deficit on its balance of payments for goods and services, to pay for its imports, it must:

Question

Quizplus · Accepted Answer

To pay for its imports, a country running a deficit on its balance of payments for goods and services must sell assets to foreigners. This can include selling government bonds, stocks, or other investments to foreign entities to obtain the necessary funds to pay for imports. Raising taxes or decreasing exports would not necessarily address the deficit in the balance of payments, and printing new money would only lead to inflation.

If a Country Runs a Deficit on Its Balance of Payments