Archive | Causes

The following points will highlight the four main causes of balance of payment policies. Cause # 1. Devaluation or Depreciation: These mean a reduction in the foreign exchange value of a nation's currency. Thus, in 1949, 1966 and 1991, the rupee value was lowered in terms of pound when there was a system of fixed exchange rates — in this [...]

Here we detail about the four causes of disequilibrium in the balance of payments. Cause 1# Cyclical Disequilibrium: Cyclical disequilibrium is caused by the fluctuations in the economic activity or what are known as trade cycles. During the periods of prosperity, prices of goods fall and incomes of the people go down. These changes in incomes of the people and [...]