Suppose the policymakers believe their country's currency is overvalued, they should apply a policy of

Question

Quizplus · Accepted Answer

Devaluation is the correct policy for a country's policymakers to apply if they believe their currency is overvalued. It involves deliberately lowering the value of the country's currency relative to other currencies, making exports cheaper and imports more expensive, which can help correct the perceived overvaluation.

Suppose the Policymakers Believe Their Country's Currency Is Overvalued, They