When a country runs a trade deficit, it does so by:

a. borrowing from foreign countries or selling assets to them.

b. borrowing from foreign countries or buying assets from them.

c. lending to foreign countries or selling assets to them.

d. lending to foreign countries or buying assets from them.

Question

Kaitlynn Trujillo

History

3 January, 22:27

When a country runs a trade deficit, it does so by:

a. borrowing from foreign countries or selling assets to them.

b. borrowing from foreign countries or buying assets from them.

c. lending to foreign countries or selling assets to them.

d. lending to foreign countries or buying assets from them.

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Answers (1)

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Chase Walker · Answer 1

The best answer is B

A trade deficit is caused when a country cannot produce all it needs and so borrows from other countries willing to loan it the funds needed to finance the purchase of imports.

A trade deficit can also occur if a domestic company manufactures a lot of its products in other countries. If the raw materials are shipped overseas to its plant, that is counted as an export. When the finished goods are shipped back home, that's counted as an import. If the imported goods value outweigh the exported raw material value, then this can be said to be a trade deficit.

When a country runs a trade deficit, it does so by:a. borrowing from foreign countries or selling assets to them.b. borrowing from foreign countries or buying assets from them.c. lending to foreign countries or selling assets to them.d. lending to foreign countries or buying assets from them.