Question

A deficit on the current account Group of answer choices normally causes a surplus on the capital and financial account. has no relationship to the capital and financial account. means that a nation is making international transfers. normally causes a deficit on the capital and financial account.

Answer 1

normally causes a surplus on the capital and financial account.

Step-by-step explanation:

A deficit can be defined as an amount by which money, falls short of its expected value.

In Financial accounting, deficit is usually as a result of revenue falling below expenses or expense exceeding revenue at a specific period of time.

For instance, if in a country liabilities exceeds assets or import exceeds export there would be a deficit in the financial account of the country.

Generally, a deficit on the current account normally causes a surplus on the capital and financial account. This is simply as a result of a country having to import more goods and services than it is exporting to other countries in trade.

In conclusion, a deficit on the current account is because the value of goods and services exported is lower than the value of goods and services being imported in a particular country.