Question

Why if a country has deficit in balance of current account balance of account capital account will be surplus?

Answer 1

Answer:

Yes, If a country has deficit in balance of current account then the balance of account capital account will be surplus.

Explanation:

Balance of current account and balance of capital amount are interrelated. A deficit on current account must be settled by a net surplus on the capital account. The foreign currency necessary to finance the excess import must be either borrowed from some other country or be provided by the government out of its reserves of gold and foreign exchange. Similarly, a surplus in current account must be matched by deficit in the capital account.