Enhancing productive capacity to boost exports

Steps:

• Identify current account deficit as imports exceeding exports, requiring long-term export growth or import reduction.
• Focus on structural policies over demand-side ones for sustainable improvement.
• Assess options: seek measures increasing productivity and competitiveness.
• Select grants, as they directly spur investment in export-oriented sectors.

Why D is correct:

• Grants lower investment costs, increasing capital formation and productivity per the accelerator principle, enabling higher exports and current account surplus.

Why the others are wrong:

• A worsens deficit by reducing import barriers, boosting imports via cheaper foreign goods.
• B stimulates demand and imports through lower interest rates, depreciating currency short-term but risking inflation.
• C raises disposable income, increasing consumption and import demand without supply-side gains.

Final answer: D