Q.1.2 A deficit on the current account of a country's balance of payments can be financed by a surplus: (1) Of exports over imports; (2) Of net gold exports; (3) On the financial account; (4) On the trade balance.
The balance of payments (BOP), sometimes known as the balance of international payments, is a statement of all transactions that take place between entities in one country and the rest of the world over a certain time period, such as a quarter or a year. It outlines all transactions between individuals, businesses, and government entities within a country and individuals, businesses, and government bodies outside the country.The current account and the capital account are the two accounts that the balance of payments divides. The capital account is sometimes referred to as the financial account, and there is a distinct capital account that is usually quite modest. Goods, services, investment income, and current transfers are all included in the current account.
Financial instruments and central bank reserves are included in the capital account, which is defined widely.
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