Question 39
Balance of Payments and Exchange RatesWhich of the following is likely to reduce a surplus in the balance of payments of a country?
- A.Devaluation
- B.Increased tariff on imports
- C.Export promotion
- D.Currency appreciation
Show the answer and explanation
Answer: D (Currency appreciation)
Explanation
Appreciation makes exports dearer and imports cheaper, which reduces a surplus. The other options increase it.