Answer to Question #16228 in Economics of Enterprise for babu
Can a country continually have a current account deficit and continue to borrow from the rest of the world?
When one country trades with another, money and financial capital flow between the countries. The balance of payments account captures this flow. A country running a current account deficit will borrow from the rest of the world; and a country running a surplus will lend. In the end, all countries are better off through trade.