Question 46
Balance of Payments and Exchange RatesDeficit in the balance of payments is financed through
- A.capital account.
- B.current account.
- C.invisible trade
- D.visible trade.
Show the answer and explanation
Answer: A (capital account.)
Explanation
A current account deficit is paid for by capital inflows (borrowing, investment) or by running down reserves, recorded in the capital/financial account.