Question : A current account deficit indicates that a country is spending more on imports than it is earning from______________.
Option 1: exports
Option 2: services
Option 3: capital
Option 4: investments
Correct Answer: exports
Solution : The correct answer is (a) exports
A current account deficit indicates that a country is spending more on imports of goods and services than it is earning from its exports of goods and services. In other words, the value of goods and services imported by the country exceeds the value of goods and services exported. This results in a deficit in the trade balance, which is one of the components of the current account. The current account also includes other components such as income from investments abroad and transfers, but in the context of a current account deficit, the imbalance between imports and exports is the primary factor.
