A-LevelEconomicsGovernment macroeconomic intervention9708/12 · May/June 2019 · Q281 Mark
A country with a balance of trade deficit raises interest rates. How may this help to reduce the deficit in the short run?
Aby increasing the inflow of foreign direct investment
Bby lowering the foreign exchange rate
Cby raising the level of domestic capital investment
Dby reducing the level of domestic aggregate demand
✓ Correct answer
D: by reducing the level of domestic aggregate demand
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