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Balance of Payments

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Assume that a nation faces a balance of payments deficit with high unemployment. What exchange-rate adjustment can be made to resolve these problems?

What if the nation experiences a balance of payment surplus with inflation - what exchange-rate adjustment can be made to resolve this problem?

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Solution Summary

Exchange rate of the country can be strengthened by measures such as increasing interest rates.

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Exchange rate of the country can be strengthened by measures such as increasing interest rates to induce more foreign investment in the country and thereby, ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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