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Economics (AS & A Level) · Oct / Nov 2021 · Paper 11 · Question 24

9708Current account of the balance of payments

An economy experiences a deficit on the current account of its balance of payments. What could the economy do to finance this deficit?

  1. Aadopt a fixed exchange rate
  2. Battract more foreign direct investment
  3. Cdecrease income tax rates
  4. Dlower the rate of interest

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Correct answer: B. attract more foreign direct investment

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