A country's government is concerned by a large deficit on the current account in its balance of payments and by a rising inflation rate. The country's currency is kept at a fixed exchange rate. Which policy measure is most likely to enable the government to cut the current account deficit and bring down the inflation rate?
- Adevaluation of the currency
- Bincreasing government spending
- Cdecreasing the direct taxes
- Dincreasing the interest rate