In order to correct adverse balance of payments problem, government should?
A. reduce tariffs
B. increase subsidies on exports
C. increase tax on local industries
D. reduce personal income tax
Correct Answer: B
Explanation
Methods of correcting adverse balance of payments
Well- known [b]Methods of Correcting in Adverse Balance of Payment[/b]
Trade Policy Measures: Expanding, Exports and Restraining Imports
Expenditure-Reducing Policies
Tight Monetary Policy
Contractionary Fiscal Policy
Expenditure – Switching Policies: Devaluation
Devaluation: Marshall Lerner Condition
