Economics Multiple Choice Question – 3 January 2022

A country’s balance of payments current account is in deficit.

How can this be restored to equilibrium, assuming the Marshall-Lerner condition holds?

Select ONE answer:

1. increase the exchange rate
2. reduce income tax
3. reduce primary income
4. subsidise domestic producers

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 4

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

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