A 'Current Account Deficit' (CAD) is always detrimental to an economy and must be eliminated immediately by imposing strict import bans and capital controls.

Answer: False

A CAD is not inherently bad; its impact depends on how the borrowed foreign capital is utilized. If a developing nation runs a CAD to import heavy machinery, technology, and capital goods that will boost future productive capacity and export earnings, the deficit is sustainable and beneficial. It only becomes a crisis if the CAD is driven by excessive consumption of imported luxuries or if it is financed by volatile, short-term 'hot money' rather than stable FDI.