In an attempt to correct a deficit balance of payment, a country may decide to increase
Answer Details
In order to correct a deficit balance of payment, a country may decide to increase its domestic production. This means that the country would focus on producing more goods and services within its own borders, which would reduce the need for imports from other countries. By reducing imports, the country can improve its balance of payments by decreasing the amount of money that it is sending out of the country.
Increasing imports, on the other hand, would worsen the balance of payments deficit, as more money would be flowing out of the country to pay for goods and services from other nations. Domestic expenditure, such as spending by consumers and businesses, may have an impact on the balance of payments, but it is not a direct solution to correcting a deficit balance of payments.
Finally, imposing a tax on infant industries, which are newly established domestic businesses, would likely harm the country's economy rather than improve the balance of payments. These industries need support and protection to grow and compete with established foreign industries, and imposing a tax on them could hinder their development.