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Which of the following can be a reason for widening Current Account Deficit?
  1. Increased fossil fuel imports
  2. Growth in FDI inflows
  3. Decrease in exports
Select the correct answer using the code given below:
  • a)
    1 and 2 only
  • b)
    2 and 3 only
  • c)
    1 and 3 only
  • d)
    1, 2 and 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Which of the following can be a reason for widening Current Account De...
  • A current account deficit occurs when the total value of goods and services a country imports exceeds the total value of goods and services it exports. Increasing imports and decreasing exports contribute to rising Current Account Deficit. Hence, statement 1 and 3 are correct.
  • The balance of exports and imports of goods is referred to as the trade balance. Trade Balance is a part of ‘Current Account Balance’. According to an earlier report of 2021, High Oil Imports, High Gold Imports are the major driving force, widening the CAD. Whereas FDI inflows promote exports thus it does not contribute to Current Account deficit. Hence, statement 2 is not correct.
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Which of the following can be a reason for widening Current Account Deficit? Increased fossil fuel imports Growth in FDI inflows Decrease in exportsSelect the correct answer using the code given below:a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?
Question Description
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