Difference Between Cad And Trade Deficit – Indian Economy – Free PDF Download


Current Account Deficit:

  • The current account measures the flow of goods, services, and investmentsinto and out of the country. It represents a country’s foreign transactions and, like the capital account, is a component of a country’s Balance of Payments (BOP).
  • There is a deficit in Current Account if the value of the goods and services imported exceeds the value of those exported.
  • A nation’s current account maintains a record of the country’s transactions with other nations, that includes net income, including interest and dividends, and transfers, like foreign aid. It comprises of following components:
    • Trade of goods,
    • Services, and
    • Net earnings on overseas investments and net transfer of payments over a period of time, such as

Trade Deficit

  • Trade deficit occurs when the cost of a country’s imports exceeds the cost of Its exports.
  • The term “trade deficit” refers to the amount of international trade that takes place between countries throughout the world.
  • When an international transaction account has a negative balance, it is said to be a trade deficit. These foreign accounts, such as the balance of payments, track all monetary transactions between residents and non-residents.




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