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Chapter 10: Q 36. (page 267)

Is it better for your country to be an international

lender or borrower?

Short Answer

Expert verified

To be a lender is better than a borrower generally.

Step by step solution

01

Step 1. Definition

When an economic transaction happens the person who gives money is the lender and the person who borrows or takes it is the borrower of the money.

02

Step 2. Explanation

It is comparably better to be a lender than a borrower. This is because, when a country is a lender, it will experience a trade surplus. When it lends its exports increases capital increases and employment increase as to complete the lending the country must have to employ the persons to produce the required output. The country will also receive interest on its lending amount. So that’s why a lender is in a better position.

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Most popular questions from this chapter

Why does a recession cause a trade deficit to increase?

The GDP for the United States is \(18,036billion and its current account balance is -\)484billion. What percent of GDP is the current account balance?

Occasionally, a government official will argue that

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At one point Canada’s GDP was \(1,800billion and its exports were \)542billion. What was Canada’s export ratio

at this time?

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a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
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