Question
A country is said to be experiencing a Current Account
Deficit when _____Solution
The Current Account of the Balance of Payments includes trade in goods and services, primary income (like interest and dividends), and secondary income (transfers such as remittances). A Current Account Deficit (CAD) occurs when a country’s total payments on the current account exceed its total receipts, meaning imports and outward payments are greater than exports and inward receipts.
- Option A describes a trade surplus
- Option B relates to the capital account
- Option D refers to fiscal deficit
- Option E refres to a situation of Forex or BoP crisis when an extreme  deficit depletes reserves.
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