A .........deficit is financed by net capital flows from the rest of the world, thus by a capital accounts surplus.

Options

A. Current Account
B. Saving Account
C. Capital Account
D. Asset Account

Answer

A

Explanation

Current account deficit is a measurement of a country.s trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.A country that has current account deficit (spending more aborad than it receives from sales to the rest of the world) must finance it by selling asstes or by borrowing abroad.Thus, any current account deficit is of necessity fianced by a net capital inflow.