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From course:

Economics A Level (DONEEEEEEE)

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Question:

How may Governments try to Correct their Balance of Payment Deficit?

Author: eric_galvao



Answer:

-Policies may be exeted to Reduce Domestic Prices meaning Exports Up, Imports down -Impose Restrctions on Imports like Tarrifs to make them more Expensive [May cause Inflation if Price Inelastic] -Devalue [Fixed Exchange] or Depreciate [Floating] the Currency making Exports Cheaper and Imports Expensive [Marshall Lerner Condition] -Governments use Fisical or Monetary Policy to reduce Spending [Less Projects using Imported Materials and less Borrowing]


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