A trade deficit can be financed in all of the following ways except by:
A) borrowing from foreigners.
B) selling domestic assets to foreigners.
C) selling foreign assets owned by domestic residents to foreigners.
D) borrowing from domestic lenders.

Question

Quizplus · Accepted Answer

A trade deficit refers to a situation where a country imports more goods and services than it exports. To finance a trade deficit, the country can borrow from foreigners (option A), sell domestic assets to foreigners (option B), or sell foreign assets owned by domestic residents to foreigners (option C). However, borrowing from domestic lenders (option D) does not help to finance a trade deficit since the funds are coming from within the country and not from abroad.

A Trade Deficit Can Be Financed in All of the Following