Site navigation

If a country has deficit in balance of current account, balance of capital account will be :

Under the double-entry Balance of Payments (BoP) accounting identity, the sum of the Current Account balance and the Capital Account balance (including official reserve…

Choose your answer

If a country has deficit in balance of current account, balance of capital account will be :

Select one answer
Answer and explanation

Correct answer B

Under the double-entry Balance of Payments (BoP) accounting identity, the sum of the Current Account balance and the Capital Account balance (including official reserve transactions) equals zero. Therefore, if a country runs a deficit in its Current Account, the balance of its Capital Account must be in 'Surplus' to finance that deficit.

Practice for these exams

  • UGC NET Commerce

Related question papers

Related exam syllabi

Related questions in this topic