Question

can there be deficit between current account and capital account at the same time.Explain?

Answer 1

ANSWER ::

  Current Account Represent The Country's Net Income Over A Period Of Time By Export And Import Of Goods That Is Mentioned In The Current Account.

Capital Account Represent The Net Changes In The Assets And Liability Of The Country During Some Period Of Time. It Shows Country's Inflow And Outflow Foreign Investment During Particular Year.

Current Account And Capital Account Deficit At The Same Time Is Not Possible, Because The Current Account Deficit Is Fulfill By The Capital Account Surplus Or Current Account Surplus Is Fulfill By The Capital Account Deficit.

-> Example :: If Countries Import $10 Billion And its Export Is $5 Billion So It Cause $5 Billion Of Current Account Deficit In The Country At The Other Part If Countries Foreign Investment(Inflow) Is $12 Billion And Country Invest In Foreign Country(Outflow) Is $7 Billion So Here Country Have Capital Account Surplus Of $5 Billion Which Is Used To Fulfill The Current Account Deficit In Current Year

So We Assume That At Every Situation If Country Have Current Account Deficit So They Have Capital Account Surplus Or If They Have Current Account Surplus So They Have Capital Account Deficit.