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WorksheetsBalance of Payments
Total questions: 14
Worksheet time: 36mins
What is a consequence of reducing current account deficit?
Increase of import
Redistribution of income
Upward pressure on the currency
Decrease in export
What would be an expenditure dampening policy through monetary policy?
Increasing interest rate
Decreasing interest rate
Increasing government spending
Decreasing tax rate
Why might a reduction in domestic interest rates have an adverse effect on a country’s balance of payment current account?
It will cause a rise in the exchange rate.
It will make the country’s industry less competitive.
The resulting higher level of economic activity is likely to increase imports.
There will be an outflow of capital from the country.
Which policy to correct a balance of payments deficit would be classified as an expenditure dampening policy?
A devaluation of the exchange rate
An increase in direct taxes
An increase in import tariffs
The introduction of import quotas
What would be an expenditure switching measure through monetary policy?
Currency revaluation when there is current account deficit
Currency devaluation when there is a current account surplus
Currency devaluation when there is a current account deficit
Imposing tariffs on imports
In the short run, which policy measure would tend to reduce a country’s balance of payments deficit but increase its inflation rate?
A decrease in the level of import tariffs
An appreciation of the country’s currency
An increase in the level of indirect taxes
A reduction in government spending
A policy designed to encourage people to change from buying foreign-produced products to buying domestically produced products, is known as…..
Expenditure dampening measure
Expenditure switching measure
Expenditure expansion measure
Expenditure loss measure
A policy designed to reduce imports and increase exports by reducing total level of spending is known as………..
Expenditure expansion measure
Expenditure switching measure
Expenditure dampening measure
Expenditure aggregate measure
Which is an expenditure switching measure through fiscal policy?
Increasing tariffs on exports
Decreasing government spending
Increasing money supply
Government imposing tariffs on imports
How would supply side policy reduce current account deficit?
By reducing government spending
By devaluating the currency
By making domestic markets more attractive to invest in
By making domestic products more price competitive
The less industrial action, the (a) MNCs are willing to invest in the country.
Privatisation, as a supply side policy, might not lead to an increase in efficiency if………….
Explain two possible supply side policies in facing balance of payments disequilibrium.
Explain the effectiveness of providing subsidies to firms as a supply side policy in reducing current account deficit.
