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In order to correct adverse balance of payments problem, ...

In order to correct adverse balance of payments problem, government should

A.

Reduce tariffs

B.

Increase subsidies on exports

C.

Increase tax on local industries

D.

Reduce personal income tax

Correct answer is B

Methods of correcting adverse balance of payments

Well- known Methods of Correcting in Adverse Balance of Payment

  • Trade Policy Measures: Expanding, Exports and Restraining Imports
  • Expenditure-Reducing Policies
  • Tight Monetary Policy
  • Contractionary Fiscal Policy
  • Expenditure – Switching Policies: Devaluation
  • Devaluation: Marshall Lerner Condition