Question

What can a nation do to improve the exchange rate of it's currency?

oA. try to export less while importing more

oB. try to decrease its trade surplus

oC. try to improve its balance of trade

oD. try to lower its gross domestic product (GDP)​

Answer 1

C. try to improve its balance of trade.

A nation can improve the exchange rate of its currency by taking measures to improve its balance of trade. This can be done by increasing exports or reducing imports, which can be achieved through various policies such as promoting domestic industries, reducing trade barriers, or implementing export subsidies. When a nation has a positive balance of trade, meaning it exports more than it imports, there is increased demand for its currency, which can lead to an increase in its exchange rate.