Capital flows and current account deficit (CAD) are related as capital flows can help finance a country’s current account deficit. However, excessive reliance on capital flows to finance a current account deficit can also be risky. Evaluate.

9. Capital flows and current account deficit (CAD) are related as capital flows can help finance a country’s current account deficit. However, excessive reliance on capital flows to finance a current account deficit can also be risky. Evaluate.