A country experiences both a high rate of inflation and a persistent deficit in the balance of payments on current account.
Which one of the following is most likely both to reduce inflation and to reduce the balance of payments deficit?
A reduction in interest rates
An increase in personal income taxes
An increase in the government's budget deficit
A depreciation of the 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.