"Eldoria has run a continuous deficit on the current account of its balance of payments for over a decade, driven by a deep-seated deficit in its trade in goods. While its service sector (mainly tourism) remains in surplus, this is insufficient to offset the structural weakness in manufacturing. Low productivity, stagnant investment in domestic R&D, and an overvalued currency have made domestic goods uncompetitive globally. Economists debate whether the government should focus on short-term expenditure-reducing measures or long-term structural reforms to restore balance."
Using Extract D and your economic knowledge, evaluate the policy options available to the Eldorian government to correct its persistent current account deficit.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.