Balance of payment deficit
Definition
A balance of payment deficit occurs when a country imports more goods, services, and capital than it exports. This leads to an outflow of currency from the country and can result in negative economic consequences.
Analogy
Think about your personal finances. If you spend more money on shopping or eating out than what you earn from your job or allowance, you will have a deficit. Similarly, when a country spends more on imports than it earns from exports, it experiences a balance of payment deficit.
Related terms
Trade surplus: When a country exports more goods and services than it imports.
Current account: Part of the balance of payments that tracks trade in goods and services.
Capital account: Part of the balance of payments that records transactions involving financial assets.
"Balance of payment deficit" appears in:
Study guides (1)
Are you a college student?
Study guides for the entire semester
200k practice questions
Glossary of 50k key terms - memorize important vocab
Resources
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.