Foreign trade balance, Finance Basics

Foreign Trade Balance

If the Government buys or imports much more than it sells or exports there will be a trade deficit such will require financing.The most important source of financing could be debt. This Government would one time again go into the market and there it borrow and reason an upward pressure on funds available for lending.

This reasons the interest rates to go up. If there was a favorable balance of trade after that the Government could not borrow and the interest rates could keep relatively stable.

Posted Date: 1/30/2013 3:07:51 AM | Location : United States

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