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.
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.