Overview

disequilibrium


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A situation in which planned economic actions cannot be carried out. Ex ante plans for spending and selling, or for producing and consuming, cannot be carried out if they are inconsistent with each other. For example, if the ex ante level of demand for a product exceeds the level of supply then not all demand can be satisfied. Disequilibrium can arise in individual markets, or in the external relations between countries. It produces discrepancies between ex ante plans and ex post outcomes, which lead to a dynamic process of change. Economic dynamics studies whether the reactions to disequilibrium tend to reduce its extent or to exacerbate it. See also fundamental disequilibrium.

Subjects: Economics.


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