What is disequilibrium in economics?

A situation in which opposing economic forces such as demand and supply are not in balance, creating pressure for adjustment.

What is balance of payments disequilibrium?

A persistent imbalance in a country's external transactions, which must eventually be corrected through the exchange rate, domestic demand or competitiveness.

Disequilibrium

noun (countable/uncountable)

/ˌdɪsˌiːkwɪˈlɪbriəm/

A state in which the market-clearing forces of supply and demand are not in balance, resulting in persistent excess supply (surplus) or excess demand (shortage) at prevailing prices; more broadly, any condition of macroeconomic imbalance such as persistent current account deficits, inflation, or unemployment. In Keynesian macroeconomics, the labour market can persist in disequilibrium (unemployment) because wages are downwardly rigid. India's agricultural markets frequently exhibit structural disequilibrium — chronic mismatch between MSP-driven production incentives and actual consumer demand — contributing to food price volatility.

✍️ Usage in a UPSC answer

India's agricultural commodity markets exhibit a persistent structural disequilibrium — MSP announcements stimulate surplus paddy and wheat production while demand for pulses and oilseeds remains unmet — distorting price signals across the food supply chain.

Synonyms

imbalancemarket failuremarket distortionmacroeconomic instabilitymarket disequilibrium

Antonyms

equilibriummarket clearingbalancestabilityWalrasian equilibrium

🌱 Word Family

disequilibrate (verb), disequilibrating (adjective), equilibrium (noun, antonym), disequilibria (plural noun)

🔡 Root

Latin dis- = apart, negation + Latin aequus = equal + libra = balance

📜 Etymology

Formed from Latin dis- (negation) and aequilibrium (equal balance), from aequus (equal) and libra (scales, balance). As a physical term, it denotes a body out of balance; economists adopted it in the 19th century to describe deviations from competitive equilibrium. Keynesian economics made macroeconomic disequilibrium a central analytical concept in the 1930s.

🧠 Memory Hook

DIS-EQUILIBRIUM = DISTURBED balance. Think of scales (LIBRA) with one side DISTORTED (DIS) by too many goods or too little demand. The market's scales are unbalanced.

🎯 How This Word Works in UPSC Writing

A state in which opposing forces are not in balance, so pressure for adjustment remains. In GS3 it is most useful for the external sector, where a persistent balance of payments disequilibrium signals that the exchange rate, domestic demand or competitiveness must eventually change. The analytical value is that disequilibrium is not merely a problem to deplore, it is the mechanism that forces correction.

⚖️ Don’t Confuse It With

Disequilibrium is an unbalanced state carrying pressure to adjust. Deficit is a specific shortfall in an account. Volatility is the size of fluctuation, which can occur around a perfectly stable equilibrium. Instability describes a system that moves further away from balance once disturbed.

🇮🇳 Hindi Meaning

असंतुलन (asantulan).

❓ Common Questions

What is disequilibrium in economics?: A situation in which opposing economic forces such as demand and supply are not in balance, creating pressure for adjustment.
What is balance of payments disequilibrium?: A persistent imbalance in a country's external transactions, which must eventually be corrected through the exchange rate, domestic demand or competitiveness.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

Relevant across:GS3 · Economy, Environment, S&T & Security

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