Post Utme Covenant University 2023 Economics Question 24

Practice objective / multiple choice question 24 from the 2023 Post Utme Covenant University Economics examination.

Post Utme Covenant University 2023 Economics Objective / Multiple Choice
Question 24 POST_UTME_COVENANT_UNIVERSITY • 2023 • ECONOMICS • objective

A country is experiencing a balance of payments crisis due to a large trade deficit. U\sing the concept of exchange rates, explain how the country can use monetary policy to reduce its trade deficit and improve its balance of payments.

Answer Options

A. The country can use monetary policy to reduce its trade deficit by increa\sing the money supply and reducing interest rates.
B. The country can use monetary policy to reduce its trade deficit by reducing the money supply and increa\sing interest rates.
C. The country can use monetary policy to reduce its trade deficit by fixing the exchange rate and implementing capital controls.
Correct Answer D. The country can use monetary policy to reduce its trade deficit by floating the exchange rate and allowing the market to determine the exchange rate.
Correct Answer
D
Correct Option:
The country can use monetary policy to reduce its trade deficit by floating the exchange rate and allowing the market to determine the exchange rate.

About This Question

This is Post Utme Covenant University 2023 Economics Question 24. It is one of the objective questions from the 2023 Post Utme Covenant University Economics examination.

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