ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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reduce the net income deficit in the current account
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increase the net income deficit in the current account
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have no effect on the net income outcome.
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None of the above
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Detailed explanation-1: -A surplus on the financial account means that there are more investment funds flowing into the country than flowing out. These inflows may be to fund a deficit on the current account of the balance of payments. Inward investment may help create jobs and boost growth, but anyone investing in an economy expects a return.
Detailed explanation-2: -A current account surplus means an economy is exporting a greater value of goods and services than it is importing. A country with a current account surplus will have a deficit on the financial/capital account.
Detailed explanation-3: -The Current Account Deficit could be reduced by boosting exports and curbing non-essential imports such as gold, mobiles, and electronics.
Detailed explanation-4: -Devaluing the domestic currency. Reduction in the export subsidy. Adopting suitable policies which attract greater FDI and more funds from FIIs.