When a Country Runs a Trade Deficit, It Does So

question 90

Multiple Choice

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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Definitions:

Smooth Consumption

A concept in economics where individuals prefer to have a stable consumption pattern over time, smoothing out the highs and lows in their spending and consumption.

Future Earnings

The expected amount of money an individual, business, or asset is anticipated to generate in the future.

Behavioral Economists

Specialists in economics focusing on how psychological, emotional, cultural, and social factors influence the economic decisions of individuals and institutions.

Realized Losses

Losses that occur when an asset is sold for less than its purchase price, thereby converting a theoretical loss into an actual loss.