When nations continue to run large and ever-growing trade deficits over extended periods of time,creditor nations will eventually stop taking IOUs and trade will cease.

Question

Quizplus · Accepted Answer

When a nation runs a trade deficit, it means that it is importing more goods and services than it is exporting. This means that the nation is accumulating debt to other nations. If this deficit continues to grow over time, the creditor nations will eventually stop lending money to the debtor nation, and trade will cease.

When Nations Continue to Run Large and Ever-Growing Trade Deficits