Two routes to a smaller deficit
Two routes to a smaller deficit
An expenditure-switching policy redirects demand from imported goods and services towards domestically produced alternatives. A currency depreciation makes imports relatively more expensive and can make exports more price-competitive. Tariffs make imports more expensive, while import quotas restrict their quantity, but neither directly reduces export prices.
Step-by-step lessons on CIE Intl A Level Economics 11.1.3 difference between expenditure-switching and expenditure-reducing policies. Each one builds up to exam-style questions.