Twin deficits is a situation when both the government budget balance and current account balance linked together strongly.

Twin deficits is a situation when both the government budget balance and current account balance linked together strongly. It is called so because in this situation an economy faces both fiscal deficits and current account deficits together. As we know fiscal deficits is a situation when government spending is greater than the government incomes and the current account deficits is a situation when the value of imports are greater than the value of exports. For checking, whether the twin deficits are really same or not we need to check using mathematical equations. If in a situation when an economy faces more deficits or in other words deficits increases and savings remain same. In this situation, we can conclude that either investment fall or net export fall. Again if investment remain same then we left with fall in net export also means current account deficits. Hence, it is a situation of twin deficits as because increase in budget deficits causes current account deficits.

What is another term that we can use for the current account????