optimum restrictions,and not the state of the trade balance,which determines whether This concludes the analysis of alternative policies for correcting a "flow"balance-of- payments.To complete the aalysis of"flow"disequilibria.it would reserve movements between foreign exchange authorities,and to consider alternative policies for and capital account combined.The central problem in this case is todeteine the level of urrenaccount surpuor deficit,cpital xpmat which economic policy should aim.This raises two further problems too difficult to pursue here:the optimu rate,and the degree towhich In conclusion,the argument of this reading may be summarized as follows:formulation of the balance of the difference between aggregate receipts and payments,rather than receipts and payments on international acoount only,has two major advantages.It brings out the essentially monetary nature of a deficit,which must be accompanied by dishoarding of whole.A deficit may refiect a"stock"decision or a"flow"decision by the community.The conditions which make a "stock"deficit a policy problem indicate the use of direct control mcthods as against pricesystem methods or ealing on current account may be divided into expenditure-reducing and expenditure-switching policies:in ful emplyment nditions the latter must be supported by the fommer, inflation for their effect which in either case cannot be adequately in terms of elasticities When capital acoount transactions are introduced into the analysis.the choice economic analysis 6