If the current account is in deficit, we know that the capital account is in deficit.

Question

Quizplus · Accepted Answer

The current account and capital account are two separate components of a country's balance of payments. A deficit in the current account (i.e. net outflow of goods, services, and income) does not necessarily mean there is a deficit in the capital account (i.e. net inflow/outflow of financial capital). It is possible for a country to finance a current account deficit with inflows of foreign capital, resulting in a surplus in the capital account.

If the Current Account Is in Deficit, We Know That