A-LevelEconomicsInternational economic issues9708/12 · Feb/Mar 2017 · Q231 Mark

A country has a fixed exchange rate. What is likely to result in a deterioration in its balance of payments?

Adecrease in interest rates in foreign countries

Bdecrease in the country's interest rates

Cdecrease in the country's National Income

Dan increase in the income of foreign countries

✓ Correct answer

B: decrease in the country's interest rates

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Feb/Mar 2017 Paper 1 Variant 2, question 23.

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