Question

Can there be a deficit on current account and a deficit on capital account at the same time? Explain, giving an example.

Answer 1

ANSWER :-

☆The current account balance incorporates the universal exchanges of product, administrations, and speculation adjusts, while the capital account balance considers all the advantages bought and exchanged across global fringes by that nation.

☆Since 1982, economy is running in current account deficit and every one of these periods there was a capital account overflow. However, in principle, both the capital and current account  ought to be in balance

☆ For Example :

● overflow in capital account is equivalent to deficit in current account and the other way around.

☆However, basically, there is a factual inconsistency and the error now and again ways to deal with $100 billion.

☆Along these lines, it tends to be reasoned that there can't be a deficit on current account and a shortage on capital account simultaneously.

☆The current account and the capital account are in balance. In this manner, if there is a deficit  in the current account , there will be an equal excess in the capital account and the other way around.

PLEASE UPVOTE.