Answer-When India’s Capital Account Surplus exceeds Current Account Deficit, then:

When the Capital Account has surplus that exceeds the deficit of Current Account, then there is a net surplus in Balance of Payment. In other words, there is net inflow of foreign currencies. This will increase the forex reserve of RBI.

Question

When India’s Capital Account Surplus exceeds Current Account Deficit, then:

A Forex reserve will increase

B Forex reserve will decrease

C No effect of forex reserve

D May increase or decrease

E None of the above

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When India’s Capital Account Surplus exceeds Current Account Deficit, then:

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