Economics (AS & A Level) · Feb / March 2023 · Paper 12 · Question 30
9708Policies to correct imbalances in the current account of the balance of payments
A government raises interest rates to improve the current account of the balance of payments. What might reduce the effectiveness of this policy?
- Aa fall in domestic growth
- Bconsumer pessimism
- Cincreased domestic saving
- Dprice-elastic demand for exports
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Correct answer: D. price-elastic demand for exports
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