AP MacroeconomicsInternational Trade & Finance
Trade Deficit
A trade deficit occurs when a country's imports exceed its exports, making net exports negative.
It is financed by borrowing from or selling assets to foreigners, recorded as a surplus in the financial account. A deficit is not inherently bad; it can reflect strong domestic demand or investment inflows. It is the opposite of a trade surplus.
Formula / Example
Trade deficit = Imports − Exports (when positive).
Interactive graph
International Trade →
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Study module
International Trade →
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