Answer to Question #16228 in Economics of Enterprise for babu

Question #16228
Can a country continually have a current account deficit and continue to borrow from the rest of the world?
1
Expert's answer
2012-10-12T08:24:28-0400
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.

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