Question

Difference between w current account deficit and trade deficit

Answer 1

The current account is a component of balance of payments. Current account deficit is a measurement where the value of goods and services a country imports exceeds the value of goods and services it exports to other countries in terms of dollars/money. So current account deficit occurs  when we have to give more dollars than we earn in current account transaction which are one time in nature.

It is a broader trade measure that includes the trade deficit along with other components with trade deficit being its largest component of the current account deficit.

A trade deficit on the other hand occurs when our imports of goods exceeds exports of goods.

Answer 2

The difference between the current account deficit and trade deficit is following-

The current account deficit is generally bigger trade measure which encompasses trade deficit with various components.

On the other hand, trade deficit is considered as the largest component of the deficit of current account.

It is also referred as the nation's trade balance.