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#cfa-level-1 #economics #economics-in-a-global-context #los #reading-20-international-trade-and-capital-flows
Similarly, when a country has a trade deficit, it has to borrow from foreigners or sell some of its assets to foreigners. The balance of payments explains these relationships.
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When a country has a trade surplus, it lends to foreigners or buys assets from foreigners reflecting the financing needed by foreigners running trade deficits with that country. Similarly, when a country has a trade deficit, it has to borrow from foreigners or sell some of its assets to foreigners. The balance of payments explains these relationships.

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2.1. Basic Terminology
e while those in Europe and the Middle East (which benefited from rising prices of their petroleum exports) experienced a substantial increase. Africa also experienced a small improvement in its terms of trade during this period. <span>Net exports is the difference between the value of a country’s exports and the value of its imports (i.e., value of exports minus imports). If the value of exports equals the value of imports, then trade is balanced. If the value of exports is greater (less) than the value of imports, then there is a trade surplus (deficit) . When a country has a trade surplus, it lends to foreigners or buys assets from foreigners reflecting the financing needed by foreigners running trade deficits with that country. Similarly, when a country has a trade deficit, it has to borrow from foreigners or sell some of its assets to foreigners. Section 4 on the balance of payments explains these relationships more fully. Autarky is a state in which a country does not trade with other countries. This means that all goods and services are produced and consumed domestically. The price of a go


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