Advertisements
Advertisements
Questions
Explain the concept of 'deficit' in the balance of payments.
What do you mean by deficit in the balance of payments?
Explain
Long Answer
Advertisements
Solution
The current and capital accounts are the two parts of the BOP. A current account deficit occurs when the amount of goods and services exported is less than the amount of goods and services imported. On the other hand, if there is a net capital outflow from the nation, the capital account will display a deficit. Therefore, if a country's imports exceed its exports and its capital outflow exceeds its capital inflow, we may say that its BOP will be in deficit.
shaalaa.com
Is there an error in this question or solution?
