A trade deficit can be financed in all of the following ways except by: Group of answer choices borrowing from foreigners. selling domestic assets to foreigners. selling foreign assets owned by domestic residents to foreigners. borrowing from domestic lenders.

Question

Business

Hanna Becker

26 January, 17:28

A trade deficit can be financed in all of the following ways except by: Group of answer choices borrowing from foreigners. selling domestic assets to foreigners. selling foreign assets owned by domestic residents to foreigners. borrowing from domestic lenders.

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Answers (1)

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Vanessa Golden · Answer 1

The correct answer is: borrowing from domestic lenders.

Explanation:

When we are immersed in a trade deficit, it means that we are spending abroad more than we receive for the sales we make to the rest of the world and to finance that deficit the options are: a) sell assets or; b) take a loan abroad.

This imbalance, which is one of the main macroeconomic problems and which mainly threatens regional economies, is generating a gradual reduction in the reserves of the Central Bank, because the outflow of foreign exchange from imports is greater than the income from exports, which are currently being compensated for the increase in the capital account through the issuance of debt, this situation being unsustainable in the short and medium term.