Define net borrower, net lender, creditor nation, and debtor nation. Discuss the difference between a net borrower and a debtor nation
What will be an ideal response?
A country that is borrowing more from the rest of the world than it is lending to the rest of the world is a net borrower. A country that is lending more to the rest of the world than it borrows from the rest of the world is a net lender. A country that during its entire history has borrowed more from the rest of the world than it has lent to the rest of the world is a debtor nation. A country that has invested more in the rest of the world than other countries have invested in it is a creditor nation. A net borrower is a country that is currently borrowing whereas a debtor nation has a stock of outstanding debt. Borrowing is a flow variable and the outstanding debt is a stock. Thus a net borrower could be a creditor nation that is currently borrowing or it could be a debtor nation that is currently borrowing and thereby increasing its debt.
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A stock market boom which causes stock prices to rise should cause
A) a decrease in consumption spending. B) a decrease in wealth. C) an increase in consumption spending. D) a decrease in net export spending.
We benefit from trade if we are able to obtain a good from a foreign country:
a. that has a very low domestic demand. b. the production of which requires a steady supply of unskilled labor. c. by giving up less of other goods than we would have to give up to obtain the good at home. d. by giving up more of other goods than we would have to give up to obtain the good at home. e. that has a substantial number of substitutes in the domestic market.