Practicing Success
When nation is a borrower from other countries, it means there is _____________. |
Trade surplus Deficit in current Account Surplus in current Account Trade Deficit |
Deficit in current Account |
The correct answer is Deficit in current Account. A nation is a borrower from other countries when it has a deficit in its current account. The current account is a record of a country's transactions with the rest of the world, including its trade in goods and services, its net investment income, and its net transfers. A deficit in the current account means that the country is importing more goods and services than it is exporting, and that it is paying more in investment income to foreigners than it is receiving. As a result, the country needs to borrow from other countries to finance its current account deficit. |