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Economics (AS & A Level) · Feb / March 2022 · Paper 12 · Question 28

9708Policies to correct disequilibrium in the balance of payments

'Reducing the exchange rate helps to decrease a country's balance of payments deficit because it makes imports more expensive and exports cheaper.' What does this statement describe?

  1. Aa deflationary policy
  2. Ba policy of direct controls
  3. Can expenditure-reducing policy
  4. Dan expenditure-switching policy

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Correct answer: D. an expenditure-switching policy

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