Answer to Question #330529 in Macroeconomics for Jaytee

Question

What are the most well-known causes of imbalances in the balance of

payments (BoP) of a country?

Answer 1

The conventional view is that current account factors are the primary cause – these include the exchange rate, the government's fiscal deficit, business competitiveness, and private behaviour such as the willingness of consumers to go into debt to finance extra consumption.