Question

Distinguish between ‘Trade Deficit’ and ‘Current Account Deficit’.

Answer 1

Trade Deficit’	Current Account Deficit
The difference between exports and imports of visible items is called Trade Balance. If imports exceed exports, it is regarded as Trade deficit.	Transactions relating to trade in goods and service and transfer payments constitute the current account. When current receipts are less than payments then it is regarded as current account deficit.
Trade deficit = Imports > Exports	Current Account deficit = Autonomous Current receipts < Autonomous Current payments
It’s includes only visible items.	It’s include only visible items, invisible items and unilateral transfer