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      Question

      When the payment of a country exceeds the receipt from

      trade of goods and services, transfers and net income, it is called:
      A Trade deficit Correct Answer Incorrect Answer
      B Current Account Deficit Correct Answer Incorrect Answer
      C Capital Account Deficit Correct Answer Incorrect Answer
      D Balance of Payment Correct Answer Incorrect Answer
      E Fiscal Deficit Correct Answer Incorrect Answer

      Solution

      Current Account Deficit (CAD) refers to the deficit on the current account side of the Balance of Payment. In other words, when payment from trade (both goods and services), income and transfer exceeds receipts, it will be called Current Account Deficit. When the net Current Account Balance is positive, it is called Current Account Surplus. India generally have a deficit in its current account.

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