The U.S.'s high trade deficit must be balanced by:
A) net capital inflows.
B) high net capital outflows.
C) low net capital outflows.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

A trade deficit means the country is importing more than it is exporting, which requires the country to borrow from other countries through net capital inflows to balance its accounts. Option B is incorrect because high net capital outflows would worsen the trade deficit. Option C is incorrect because low net capital outflows would not be sufficient to balance the trade deficit.

The US'S High Trade Deficit Must Be Balanced By