Q.What is meant by 'Balance of Payments disequilibrium'? State any two measures a country might use to correct a persistent deficit.

A country cannot indefinitely spend more abroad than it earns without eventually running into a real constraint — this is exactly what disequilibrium signals. …

Balance of Payments disequilibrium refers to a persistent, not merely occasional, imbalance in a country's balance of payments — most commonly a persistent current account deficit, financed by continually drawing down foreign exchange reserves or building up external borrowing, which is not sustainable indefinitely.

Measures to correct a persistent deficit include:

1. Export promotion — supporting domestic industries to increase export earnings, narrowing the gap between what is earned from abroad and what is spent abroad.
2. Exchange rate adjustment — allowing or engineering a depreciation (under a flexible system) or devaluation (under a fixed system) of the domestic currency, which makes the country's exports cheaper for foreign buyers and imports more expensive for domestic buyers, helping to reduce the deficit over time. …

Treating any single period's deficit as 'disequilibrium' — the term specifically refers to a PERSISTENT imbalance, since occasional short-term deficits or surpluses are a normal part o …