What does CAD mean in ACCOUNTING

CAD stands for Current Account Deficit, which is a measure of the total amount of money flowing in and out of a country's economy.

It measures the trade balance, sum of income, sum of payments, net current transfers, and capital account transactions between countries.

Generally, having a low CAD is considered to be healthier for an economy despite higher levels giving governments and central banks more control over economic outcomes. A high level could potentially cause long-term economic instability while too low could lead to underutilized resources.

Ways that countries can reduce their CADs include encouraging exports, reducing imports by using domestic produced goods instead, increasing foreign investment and improving infrastructural investments with other countries or regions as well as creating currency controls or other restrictions on certain kinds of transactions.

Having a large CAD creates economic imbalance which may lead to currency devaluation or increase government borrowing costs. This could result in further debt accumulation that leads to slower economic growth, higher inflation and other macroeconomic issues such as social unrests or poverty.