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It refers to the measures taken to resolve some specific economic issue. like to resolve the problem of exchange rate fluctuation.
All types of rationing will help to achieve this.
This policy will lead to lower the AD in the economy. Therefore, high direct taxes and high rate of interest will affect the local producers negatively. their profitability will also tend to fall.
You can use demand and supply because demand is always equal to MSB and supply is MSC.
The PED for imports is price In-elastic. Imagine a government imposing tariff on petrol, there would be a little change in the demand however, the price would shoot up, due to this, the balance of trade would worsen off. This affect would also be observed in terms of trade as now, the imports would cost more so terms of trade would also be worsen.
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