Question

A deficit in a nation’s current account means:

A. it must limit the flow of foreign capital investment
B. it must have a deficit in its financial account as well
C. it must increase interest rates to attract foreign investment
D. there must be a surplus in its financial account
E. there must be more exports than imports for the nation.

Answer 1

Answer:

B. it must have a deficit in its financial account as well

Explanation:

Current account deficit is the measure of the a country trade, a country imports and exports the goods. Net effect of both will be deficit or surplus.

If the Payment against the imports are higher than the receipts against the exports then there is a deficit.

If the Payment against the imports are Lower than the receipts against the exports then there is a Surplus.