An economy is currently experiencing low economic growth and high cyclical unemployment, alongside a substantial deficit on the current account of its balance of payments.
Which one of the following policy measures is most likely to both stimulate short-run economic growth and improve the current account balance?
A depreciation of the economy's exchange rate
An increase in the central bank's base interest rate
An increase in direct taxation on household incomes
An appreciation of the economy's exchange rate
327 exam-style questions on AQA A Level Economics 2.3 Economic performance, covering 2.3.1 Economic growth and the economic cycle, 2.3.2 Employment and unemployment, 2.3.3 Inflation and deflation, and 2.3.4 Possible conflicts between macroeconomic policy objectives. Each one has a worked solution and a mark scheme showing where the marks go.