Current Account Deficit.

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Alex Bernshteyn

Current Account Deficit

CURRENT ACCOUNT DEFICIT: An imbalance in a nation's balance of payments current account in which payments received by the country for selling domestic exports are less than payments made by the country for purchasing imports. In other words, imports (of goods and services) by the domestic economy are greater than exports (of goods and services). This is generally a not desirable situation for a domestic economy. However, in the wacky world of international economics, a current account deficit is often balanced by a capital account surplus, which is generally considered a desirable situation. If, however, the capital account does not balance out the current account, then a current account deficit contributes to a balance of payments deficit.

The current account is how much a country sends to foreign countries in shopping, gifts and paying interest on loans.

What the country pays out minus what the others pay in is the current account balance. If the amount paid out is more than amount paid in this is called a deficit. (If out is less than in then it is a surplus.)

If a country is sending out