Question : A ____ deficit is financed by net capital flows the rest of the world, thus by a capital account surplus.

Option 1: current account

Option 2: saving account

Option 3: capital account

Option 4: asset account


Team Careers360 9th Jan, 2024
Answer (1)
Team Careers360 15th Jan, 2024

Correct Answer: current account


Solution : The correct option is current account.

In economics, a nation's balance of payments includes two parts: the capital account and the current account. When a nation's purchases of goods and services surpass its exports, it has a current account deficit, which is an indicator of trade. Selling assets or borrowing money from another country are the only ways a government with a current account deficit may pay for its shortfall.

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