Assertion (A) : The falling aggregate expenditure or aggregate demand in the economy works to reduce imports and help in solving the balance of payment problems.
Reasoning (R) : The important way to reduce imports and thereby reduce deficit in balance of payments is to adopt monetary and fiscal policies that aims at reducing aggregate expenditure in the economy.
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Correct option is A

The correct answer is (a) (A) and (R) both are correct and (R) supports (A).
Assertion (A) is correct because there is a direct correlation between national income/expenditure and imports. When aggregate demand (AD) falls—whether due to reduced consumer spending or lower government investment—the demand for foreign goods and services also declines. This "contractionary" effect naturally narrows the trade gap and helps correct a Balance of Payments (BoP) deficit.
Reasoning (R) is also correct and provides the logical explanation for (A). It describes the Absorption Approach to BoP. By using contractionary fiscal policy (increasing taxes or cutting spending) and monetary policy (raising interest rates), a government can deliberately reduce "absorption" (total domestic spending). If the economy "absorbs" less than it produces, the surplus can be exported, and the need for imports drops, thereby improving the BoP.