Question 30
[Maximum number: 1]
Why may a government seek to reduce a current account surplus on the balance of payments?
A
to lower inflation
B
to lower unemployment
C
to raise the economic growth rate
D
to raise the exchange rate
CAIE A-Level Economics 6.5.1 Current Account Stability Objective
Practise explaining why a government may target current-account stability and, from the available evidence, why reducing an excessive surplus can ease domestic inflation pressure.
How this is tested
- explain how reducing a large current-account surplus can lower net-export demand and inflationary pressure