A current account deficit is

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A current account deficit allows for consumption smoothing by allowing a country to import more than it exports in the short term, which can benefit its citizens by giving them access to a wider variety of goods and services. However, running a deficit for an extended period of time can lead to problems such as a dependence on foreign borrowing and a potential decrease in investor confidence. Therefore, it is important for countries to manage their deficits and aim for a balanced current account over the long term.

A Current Account Deficit Is