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