can you elaborate some more please

This external sector of an economy. which is X M in the GDP equation, shows whether there is a surplus or deficit in terms of trade. Using the US as an example. suppose total imports in 2018 were USD 2.1 trillion. total exports were USD 1.3 trillion, leading to a trade deficit of -USD 0.8 trillion. Is this necessarily a bad thing? a Q X Yes v No. actually. ltjust means that the country is not producing as much as it is spending because domestic saving is not enough to fund both the government's fiscal balance and domestic investment. The US will borrow from the rest of the world through the financial markets. since trade deficits need to be financed by borrowing through international financial markets