Economics Multiple Choice Question – 29 September 2021

A country with a balance of trade deficit raises interest rates.

How may this help to reduce the deficit in the short run?

Select ONE answer:

1. by increasing the inflow of foreign direct investment
2. by lowering the foreign exchange rate
3. by raising the level of domestic capital investment
4. by reducing the level of domestic aggregate demand

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4

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

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