Economics (AS & A Level) · May / June 2022 · Paper 12 · Question 30

A country with low unemployment and a managed floating exchange rate has a persistent current account deficit on its balance of payments. Which policy to reduce this deficit is most likely to keep unemployment low, but cause inflation?

1. Adepreciating its currency
2. Bhigher direct taxation
3. Chigher import tariffs
4. Dhigher interest rates

As printed in the paper