Principles of Macroeconomics / Unit 7 MAC 0605 short lesson, about 20 seconds
A Deficit Means Borrowing
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The idea
A current account deficit means a country buys more from the world than it sells, and the difference is financed by borrowing from abroad.
In practice
So a deficit is a net inflow of financial capital, and a surplus is a net outflow.
Where people slip
The country with the deficit is the net borrower; the one with the surplus is the net lender.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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