c) Measures to reduce country's imbalance on C.A

• What is one option the Government has to tackle a current account deficit?

  They could do nothing and let market forces self-correct the deficit.
• What does it mean for the Government to do nothing about the current account deficit?

  It means allowing market forces in the foreign exchange market to self-correct the deficit.
• What is one type of policy the Government could use to address a current account deficit?

  Expenditure switching policies.
• What is another type of policy the Government could use to tackle a current account deficit?

  Expenditure reducing policies.
• What is a third type of policy the Government could implement to address a current account deficit?

  Supply-side policies.
• What does the choice of any policy to tackle a current account deficit generate?

  Both costs and benefits.
• What are the options available to the Government for tackling a current account deficit?

  • Do nothing and let market forces self-correct
  • Use expenditure switching policies
  • Use expenditure reducing policies
  • Use supply-side policies
• what are expenditure reducing policies?

  designed to reduce A.D such as deflationary fiscal policy
• what are expenditure switching policies?

  involves the use of protectionism (e.g tariffs and quotas)or the devaluation of a country's currency under a fixed exchange rate system