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Balance of Payments - Coggle Diagram

- - - - such as deflationary fiscal policy
      - contractionary monetary policy
      - People spend less-Side effect is that AD decreases
    - - Use of protectionist meausres
      - Encouraging people to buy domestic rather than import
      - However may lead to retaliation
  - - - such as expansionary fiscal policy
      - Cuts in interest rates
      - Boost the economy thus increase imports
      - May lead to high inflation
    - - reducing the use of protectionist measures
      - or an appreciation of the currency
      - Spending on domestic decreases as imports increase