A balance of payments deficit is sustainable in the short run when it is:
Correct answer: A. Covered by appropriate financial inflows
- A. Covered by appropriate financial inflows
- B. Matched by lower domestic production
- C. Eliminated by banning all imports
- D. Converted into a trade surplus automatically
Explanation
External deficits can be financed temporarily through borrowing, foreign investment or other financial-account inflows. Such financing does not automatically correct the underlying trade or income imbalance.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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