A country running a balance of payments surplus in a fixed exchange rate system may have to ____ its currency.

Question

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In a fixed exchange rate system, if a country is running a balance of payments surplus, it indicates that the demand for its currency is high. To address this, the country may have to revalue its currency, making it stronger compared to other currencies. This is done to balance the international demand and supply for the currency, reducing the surplus by making exports more expensive and imports cheaper.

A Country Running a Balance of Payments Surplus in a Fixed