Demand for a country’s exports is price elastic. If it has a deficit on the current account of its balance of payments, which policy mix is most likely to remove the deficit?
- Adecrease rate of interest; appreciate exchange rate; keep standard rate of income tax unchanged
- Bdecrease rate of interest; depreciate exchange rate; decrease standard rate of income tax
- Cincrease rate of interest; keep exchange rate unchanged; decrease standard rate of income tax
- Dkeep rate of interest unchanged; depreciate exchange rate; increase standard rate of income tax