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Question

A current account deficit implies that:

  1. Exports are greater than imports
  2. Imports are greater than exports
  3. Exports are equal to imports
  4. There is a surplus in the capital account

Answer:

Option B: Imports are greater than exports

Detailed Solution:

The correct answer is “Imports are greater than exports”.

A current account deficit indicates that a country is importing more goods, services, and capital than it is exporting.