In order to correct the adverse balance of payments problems, the government should?

A. reduce tariffs
B. increase subsidies on exports
C. increase tax on local industries
D. reduce personal income tax

Correct Answer: Option B

B. increase subsidies on exports

Explanation

Methods of correcting the adverse balance of payments

Well- known Methods of Correcting in Adverse Balance of Payment

• Trade Policy Measures: Expanding, Exports, and Restraining Imports
• Expenditure-Reducing Policies
• Tight Monetary Policy
• Contractionary Fiscal Policy
• Expenditure – Switching Policies: Devaluation
• Devaluation: Marshall Lerner Condition