Question 46
Balance of Payments and Exchange RatesIf a country has a balance of payment crisis, which of the following measures can best bring about an improvement in the short run?
- A.Large-scale importation of foreign goods
- B.Investment in capital market abroad
- C.Large-scale export of locally made goods
- D.Repayment of debt to her creditors
Show the answer and explanation
Answer: C (Large-scale export of locally made goods)
Explanation
Exporting more brings in foreign exchange and reduces the deficit; the other options send money out.