B.O.P DISEQUILIBRIUM · Part 3

and capital flows. . Price Adjustments As a result of foreign exchange outflow from a deficit country to a surplus country, there will be a fall in the money supply in the deficit country and increase in the money supply in the surplus country. This will result in rise in the price in the Measures to Correct Bop Disequilibrium Depreciation Devaluation Import control Export promotion Exchange controls Production of import substitutes Monetary policy Capital import