With the help of a diagram, evaluate the effectiveness of the use of expenditure-switching policies to reduce a current account deficit on the balance of payments.

Economics

IGCSE&ALevel

CAIE

Exam No：9708_m25_qp_42 Year：2025 Question No：5

Answer:

10.3.1.1 fiscal policy including Laffer curve analysis

10.3.1.2 monetary policy

10.3.1.3 supply-side policy including market-based and interventionist policies

10.3.1.4 exchange rate policy

10.3.1.5 international trade policy

10.3.2 problems and conflicts arising from the outcome of these policies

11.1.2 effect of fiscal, monetary, supply-side, protectionist and exchange rate policies on the balance of payments

11.1.3 difference between expenditure-switching and expenditure-reducing policies

11.2.5 the effects of changing exchange rates on the external economy using Marshall-Lerner and J curve analysis

6.5.1 government policy objective of stability of the current account

6.5.2 effect of fiscal, monetary, supply-side and protectionist policies on the current account