Question

What is meant by Current Account Deficit (CAD) and Current Account Surplus (CAS)? State their significance.

Answer 1

Correct Answer - Current Account Deficit (CAD) is a situation that arises when the receipts on current account are less than the payments on current account. In simple words, Current Account Deficit (CAD) arises when the value of exports of goods and services is less than the value of imports of goods and services. Current Account surplus (CAS) is a situation that arises when the receipts on current account is more than the payments on current account. In simple words, Current Account Surplus (CAS) arises when the value of exports of goods and services is more than the value of imports of goods and services.
CAD signifies that the nation is a borrower from rest of the world, whereas, CAS signifies that the nation is a lender to the rest of the world.
Current Account Deficit (CAD) is a situation that arises when the receipts on current account are less than the payments on current account. In simple words, Current Account Deficit (CAD) arises when the value of exports of goods and services is less than the value of imports of goods and services. Current Account surplus (CAS) is a situation that arises when the receipts on current account is more than the payments on current account. In simple words, Current Account Surplus (CAS) arises when the value of exports of goods and services is more than the value of imports of goods and services. CAD signifies that the nation is a borrower from rest of the world, whereas, CAS signifies that the nation is a lender to the rest of the world.