A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2020 · Q301 Mark

A country with a fixed exchange rate experiences a balance of payments surplus. Which policy measure will enable it to maintain its exchange rate?

Adecreasing government borrowing

Bdecreasing government spending

Cdecreasing the interest rate

Ddecreasing the money supply

✓ Correct answer

C: decreasing the interest rate

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2020 Paper 1 Variant 2, question 30.

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