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Equilibrium and Disequilibrium in the Balance of Payments
If on the current account, the value of exports is equal to the value of imports, the balance of payments is said to be equilibrium. If the two values are not equal, the balance of payments is in disequilibrium. This could be due to a trade surplus with the value of exports exceeding that of imports or due to a trade deficit with the value of imports exceeding that of exports.
In either case, a balance of payments disequilibrium cannot last indefinitely. For if this is due to a trade deficit, the country will try and move it. This is because a persistent trade deficit i.e. a fundamental disequilibrium poses several problems for an economy, namely:
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