Day: August 9, 2021

The UK has low unemployment and is managing the float of Sterling against other major currencies, but it still has a persistent current account deficit on its balance of payments.

Which policy to reduce this deficit is most likely to keep unemployment low, but cause inflation in the UK?

Select ONE answer:

1. depreciating its currency
2. higher direct taxation
3. higher import tariffs
4. higher interest rates

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

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