If a country's current account is in deficit, its capital account must be in: MCQ with Answer and Explanation

If a country's current account is in deficit, its capital account must be in:
A. deficit as well
B. surplus or official reserves must fall
C. equilibrium
D. zero
Answer: Option B
Solution (By JKSSB Mock Tests)
A current account deficit must be financed by a capital account surplus or a drawdown of official reserves.

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Practice More Economy Set 1 Questions

Question #1
Which of the following is a major objective of economic planning in a developing country?
A. Maximising inequality
B. Achieving higher growth with social justice and poverty reduction
C. Only maximising exports without domestic development
D. Complete reliance on market forces without intervention

Correct Answer: Option B


Explanation:
Economic planning in developing countries typically aims at accelerating growth, reducing poverty, promoting equity and modernising the economic structure.

This question belongs to: Economy GK Economy Set 1
Question #2
Which of the following is a characteristic of the 'Foundational Economy' approach?
A. Focus on the essential goods and services that keep citizens safe, healthy and educated, often provided collectively
B. Focus only on high-tech export sectors
C. Focus only on luxury consumption
D. Focus only on financial services

Correct Answer: Option A


Explanation:
The foundational economy comprises the everyday goods and services—utilities, food, health, education, care—that are essential for civilised life and are often most effectively provided through collective arrangements.

This question belongs to: Economy GK Economy Set 1
Question #3
Which of the following is a feature of the mixed economy model adopted by India?
A. Coexistence of public and private sectors with government regulation
B. Absence of market mechanism
C. Complete central planning without private enterprise
D. Complete private ownership of all means of production

Correct Answer: Option A


Explanation:
India adopted a mixed economy framework where both public and private sectors coexist, with the government playing a regulatory and developmental role.

This question belongs to: Economy GK Economy Set 1