The appropriate expenditure-switching policy to correct a trade deficit is
A) contractionary monetary policy.
B) expansionary fiscal policy.
C) currency devaluation.
D) currency revaluation.

Question

Quizplus · Accepted Answer

Currency devaluation makes the domestic currency relatively weaker, making domestic goods cheaper and imports more expensive, thus promoting exports and discouraging imports, which can lead to a reduction in the trade deficit.

The Appropriate Expenditure-Switching Policy to Correct a Trade Deficit Is