Macroeconomics 11th Edition by Michael Parkin

Exercise 18

The United States is a debtor nation, and since 1980 it has piled up trade deficits that total $9 trillion. At its peak in 2006, the current account deficit was almost 6 percent of GDP. To pay for the $9 trillion of goods and services we've imported in excess of our exports, we have borrowed from the rest of the world. Foreigners have purchased large amounts of U.S. assets.
a. Explain why a current account deficit means we must borrow from the rest of the world.
b. Under what circumstances will the debtor nation status of the United States be a concern