Question

Explain any two causes of disequilibrium in bops

Answer 1

Explanation:

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Answer 2

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★ Causes of disequilibrium in

BOPs:-

✴ The main cause of the disequilibrium in the balance of payments arises from imbalance between exports and imports of goods and services. When for one reason or another exports of goods and services of a country are smaller than their imports, disequilibrium in the balance of payments is the likely result.

✴ Exports may be small due to the lack of exportable surplus which in turn result from low production or the exports may be small because of the high costs and prices of exportable goods and severe competition in the world markets.

✴ An important cause of small exports is the inflation or rising prices in the country. When the prices of goods are high in the country, its exports are discouraged and imports encouraged. If it is not matched by other items in the balance of payments, disequilib­rium emerges.

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