Economics (AS & A Level) · May / June 2021 · Paper 11 · Question 30

A country has adopted a fixed exchange rate system but is currently experiencing high unemployment and a deficit in the current account of its balance of payments. Which combination of policies would be most likely to improve both the level of unemployment and the current account of the balance of payments?

1. Aadditional net spending by the government and a devaluation of the currency
2. Badditional net spending by the government and revaluation of the currency
3. Ca reduction in net spending by the government and a devaluation of the currency
4. Da reduction in net spending by the government and a revaluation of the currency

As printed in the paper