All other things being equal, which one of the following sets of changes in an economy would be most likely to bring about a reduction in its balance of payments deficit on current account?
A decrease in taxes on consumption, an appreciation of the exchange rate, and a fall in the domestic rate of inflation relative to its competitors.
An increase in taxes on consumption, a depreciation of the exchange rate, and a fall in the domestic rate of inflation relative to its competitors.
A decrease in taxes on consumption, a depreciation of the exchange rate, and a rise in the domestic rate of inflation relative to its competitors.
An increase in taxes on consumption, an appreciation of the exchange rate, and a rise in the domestic rate of inflation relative to its competitors.
