Answer to Question #284751 in Macroeconomics for sar

Question

Most countries, including the United States, import substantial amounts of goods and services from other countries. Yet the chapter says that a nation can enjoy a high standard of living only if it can produce a large quantity of goods and services itself. Can you reconcile these two facts? 

Answer 1

Solution:

Both are true. If a country is a substantial net importer, they are borrowing against future production of goods and services. If other countries don't believe that the importing country will eventually be able to produce those goods and services in the future, they won't export on credit in the first place.