Answer to Question #313191 in Macroeconomics for captain nyagah

Question

why would countries having trade surpluses operate on foreign debt?

Answer 1

Trade surplus is an economic measure of balance of trade, and occurs when a country's exports exceeds it's imports. It represents the net flow of domestic currency from foreign markets. Countries having trade surpluses operate on foreign debt so as to maintain a balance of trade and keep the net flow of currency as well as enhance economic growth which leads to higher prices and interest rates within the economy