Answer to Question #62424 in Economics of Enterprise for Lilian Alichuma

Question

difference between trade deficit and foreign debt.

Answer 1

Trade deficit is an economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.

Foreign debt is an outstanding loan that one country owes to another country or institutions within that country. Foreign debt also includes due payments to international organizations such as the International Monetary Fund (IMF). The debt may be comprised of fees for goods and services or outstanding credit due to a negative balance of trade.