Balance of Payment Tile Present Case

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Balance of Payment Tile Present Case The overall exports and imports of the Indian economy has increased over a period of  years in the post liberalisation period. Indian economy had severe balance of payment crisis during Prime-Minister Chandrasekhar’s gov cricut, Due 10 certain measure and the policies a~uptcd and introduced hy the then Finance Minister Manmohan Singh. The economy was put on […]

ECONOMIC DEVELOPMENT AND BALANCE OF PAYMENTS

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ECONOMIC DEVELOPMENT AND BALANCE OF PAYMENTS It is the usual experience of all developing economies to have serious difficulties In their balance of payments. This will he clear if we analyse the requirements of development and some of its consequences. The balance 01 payments has two aspects  the import aspect and the export aspect. On the imports side. we easily see […]

PAYMENT METHOD

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PAYMENT METHOD The success of devaluation in improving the balance of trade, and through it the balance  of payments, depends upon the demand elasticities of imports and exports of the devaluing country, In other words, an improvement in the balance of trade will depend upon whether the demand for imports and exports is elastic or inelastic. Devaluation makes the imports of the […]

Methods of Correcting Disequilibrium ill Balance of Payments

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Methods of Correcting Disequilibrium ill Balance of Payments When serious disequilibrium arises in a country’s balance of payments, steps must be taken to correct it. if the country’s economy is to be kept in a sound condition. Obviously, the causes which are responsible for such a slate of affairs must be removed. The ‘classical’ view of the adjustment mechanism is: […]

Theories Concerning Disequilibrium in balance of Payments

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Theories Concerning Disequilibrium in balance of Payments There arc broadly the following!! three main theories, which explain how a discipline ium in balance of payments is caused: (il Classical Theory of Pncc Theory. I;;) Keynesian Theory or Income Theory. I;j;) Demonstration Effect Theory. This theory explains dequalinium  the balance of payment country in  of relative .1rice structures. A country i, likely […]

EQUILIBRIUM DISEQUILIBRIUM AND ADJUSTMENT

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EQUILIBRIUM DISEQUILIBRIUM AND ADJUSTMENT Balance of Payments Equilibrium Before we analyse the conditions of disequilibrium, we would like to explain what is meant by equilibrium balance of payments. “Equilibrium is that state of the balance of payments over the relevant time period which makes it possible to sustain all open economy without severe unemployment on a continuing basis.” The essentials in this […]

Balance of Payments ami Balance of Trade

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Balance of Payments ami Balance of Trade As we have already said, balance of trade refers only to the merchandise balance or balance of visible transactions alone. On the other hand, the balance of payments refers to the sum of both thc balance on visible as well as invisible items. It also includes capital  and financial accounts. We have already […]

BALANCE OF PAYMENTS

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BALANCE OF PAYMENTS Altitude Mode, there is hardly any country which is self-sufficient in the sense that it produces all the goods aim services that it needs, Every country imports Iron other countries the goods that cannot he produced at all ill the country or can be produced only at higher cost than Ignacio supplies. Similarly, a country […]

TODAY’S HYBRID SYSTEM

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TODAY’S HYBRID SYSTEM Unlike the .earlier uniform system under either the ,gold standard or Bretton Woods, today’s exchange rate system fits into no tidy mold. Without anyone’s having planned it, the world has moved to a hybrid exchange-rate system. The major features are as follows: A few countries allow their currencies to float .freely. In this approach, a country allows […]

MANAGED EXCHANGE RATES

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MANAGED EXCHANGE RATES In between the two extremes of rigidly fixed and completely flexible is the middle ground of managed exchange rates. Here, exchange rates are basically determined by market forces but governments buy or sell currencies or Change their money supplies to affect their exchange rates. Sometimes governments lean against the winds of private markets. At other times governments have […]