Policies to improve the balance of payments

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  • Created by: Jess
  • Created on: 19-04-14 12:27

Short run:

Aim: to raise export revenue and/or reduce import expenditure in order to correct a current account deficit 

  • Exchange rate adjustment: a central bank may seek to lower the exchange rate by selling its own currency and/or reducing interest rate

A04: demand for exporrts and imports need to be price elastic 

may increase inflationary pressure

  • Deflationary demand management: to discourage expenditure on…

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