In a stable foreign exchange market,a nation can correct a deficit in its balance of payments by allowing its currency to __________.
A)appreciate
B)depreciate
C)remain constant
D)none of the above

Question

Quizplus · Accepted Answer

Depreciation of a nation's currency makes its exports cheaper and imports more expensive, which can help correct a deficit in its balance of payments by increasing export revenues and decreasing import expenditures.

In a Stable Foreign Exchange Market,a Nation Can Correct a Deficit