ELi5 more Imports than Exports

Question

If a country consistently has more imports than exports how do they avoid running out of money?

In: 0

Answer 1

A simplified way to think about this is to break down a country’s economy into three components:

* Domestic market
* Foreign trade
* Investments

Import and exports are about foreign trade, but the economy in country like the US can have massive domestic market and investments.

E.g., the United States every year imports $500 *billion* more goods than it exports (2019 figures), but in comparison the total size of the US economy (GDP) is around $21 *trillion*.

So even though the US is a net importer, generally the US economy remains strong because of a robust domestic market and large amount of capital investments.