Question

which policy is best if india facing diseqillibrium in bop, expenditure reducing or expenditure switching policy​

Answer 1

Answer:

A current account deficit occurs when the value of imports is greater than the value of exports. Policies to reduce a current account deficit involve:

Devaluation of exchange rate (make exports cheaper – imports more expensive)

Reduce domestic consumption and spending on imports (e.g. tight fiscal policy/higher taxes)

Supply side policies to improve the competitiveness of domestic industry and exports.