A-LevelEconomicsGovernment macroeconomic intervention9708/12 · May/June 2022 · Q301 Mark
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?
Adepreciating its currency
Bhigher direct taxation
Chigher import tariffs
Dhigher interest rates
✓ Correct answer
A: depreciating its currency
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