A small open economy operating under a fixed-exchange-rate regime
in a world where assets can be freely bought and sold across
international borders is suffering from a continuing balance of
payments deficit. An appropriate cure for this problem would be
1. a reduction in the rate of growth of the domestic
source component of domestic base money.
2. a devaluation of the domestic currency.
3. a tariff on domestic imports.
4. any of the above.
Choose the option above that is correct.