A balance of payment deficit can be corrected by a currency devaluation, which makes exports more attractive and imports more expensive, helping reduce the deficit.
A balance of payment deficit can be corrected by a currency devaluation. When a country's currency is devalued, it becomes cheaper relative to other currencies, making exports more attractive and imports more expensive, which can help reduce the balance of payments deficit.
For example, if a country devalues its currency, let's say the dollar, in comparison to the euro, it means that one dollar is now worth fewer euros. As a result, products priced in dollars become cheaper for those paying in euros, potentially increasing exports.
Currency devaluation can be a strategic tool used by countries to address trade imbalances and rectify balance of payment deficits.
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