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…
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If a country has deficit in balance of current account, balance of capital account will be :
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.
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UGC NET Commerce