To a macroeconomist, a trade deficit is synonymous with which of the following?

A. outflow of financial capital

B. outflow of goods and services

C. inflow of financial capital

D. inflow of goods and services

A. outflow of financial capital

Explanation:

A trade deficit means more money is leaving the country to purchase imports than is entering the country to purchase exports. There is a net flow of financial capital out of the country.

__

Whether goods and services flow in or out depends on the nature of the trade. A trade deficit can also be created when residents spend money in a foreign country while on travel there. No goods or services actually cross a border in that case.