Methods of Correcting Deficit BOP - SS3 Economics Past Questions and Answers - page 1
1
Which of the following methods can a country use to correct a deficit balance of payments?
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A
Export promotion
B
Import promotion
C
Currency appreciation
D
Increasing government spending
2
Which of the following methods can a government use to encourage domestic production and reduce the import of goods?
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A
Export promotion
B
Import substitution
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C
Currency devaluation
D
Increasing government spending
3
What is the potential drawback of currency devaluation as a method of correcting a deficit balance of payments?
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A
It can lead to inflation and higher costs for imported goods
B
It can lead to a decrease in foreign reserves
C
It can increase the country's foreign debt
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D
It can lead to a decrease in domestic production
4
What is the potential benefit of foreign aid and loans as a method of correcting a deficit balance of payments?
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A
It can support the country's economy and reduce the trade deficit
B
It can reduce the country's foreign debt
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C
It can increase the country's foreign reserves
D
It can lead to a decrease in domestic production
5
What is the potential benefit of reducing government spending as a method of correcting a deficit balance of payments?
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A
It can reduce the outflow of foreign currency
B
It can increase domestic production
C
It can lead to an increase in foreign reserves
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D
It can increase imports
7
What are the potential impacts of a deficit balance of payments on a country's economy?
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