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NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis

Over a year, an economy's exports of goods were ₹30 lakh crore and imports of goods ₹45 lakh crore. Net services exports were ₹12 lakh crore, and net primary and secondary income inflows were ₹4 lakh crore. Ignoring capital items, what is the current account balance?

The current account shows a surplus of ₹1 lakh crore. The goods trade deficit of 15 is offset by net services of 12 and net income inflows of 4, giving a total of plus 1. Mistaking the sign of the income flows gives the wrong answers.

  1. ADeficit of ₹1 lakh croreCorrect
  2. BSurplus of ₹1 lakh crore
  3. CDeficit of ₹7 lakh crore
  4. DDeficit of ₹11 lakh crore

Explanation

Trade balance = 30 - 45 = -15. Add net services +12 gives -3. Add net income +4 gives +1... so check: -15+12+4 = +1, a surplus of ₹1 lakh crore. Deficit of 1 arises from a sign error on income; deficit of 11 ignores services.

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