Economists!

[I.B.Blackman]

How would you go about correcting a current account deficit?&How do you depreciate a currency using monetary policy?

[Mr. Gayle]

Give proper values on currency, some are WAY overvalued

[I.B.Blackman]

Give proper values on currency, some are WAY overvalued

Elaborate....

[Rippy]

A depreciation of the exchange rate.

[Bardissimo]

increase your exports/decrease your imports (make ur currency depreciate)could increase interest rates so that ppl inda UK save instead of spend on foreign goods and also foreign investors would pump money into this economyif this is A level economics that is enuff as long as you explain em properly and go into greater detail

[Wavant]

A MEGA SMMFH @ me forgeting this.

[Mr. Gayle]

This was included in my works weekly blog

A government may want to maintain a currency value that is above the fundamental value. To maintain an overvalued currency, a government can purchase the resulting excess supply of the domestic currency using international reserves (foreign currency assets). However, because a country's international reserves are limited, it cannot maintain an overvalued exchange rate indefinitely. Knowing this, financial investors may launch a speculative attack, selling domestic currency assets and supplying large amounts of the country's currency to the foreign exchange market - making it more difficult to maintain the overvalued currency. This type of action often results in a devaluation of the currency

So yeah similar to what Dani said

[I.B.Blackman]

Koolio & yh this is A level.Also found a nice 12 page article on this in an Economics Today magazine.This subject is too live though.

[Superstition]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

[I.B.Blackman]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

Other countries may counter act and do the same for our exports thus not making a difference.In theory but not always in practise the idea is to make more money from these exports to correct the whole defecit so this would not make too big an impact.

[Trane]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

Other countries may counter act and do the same for our exports thus not making a difference.In theory but not always in practise the idea is to make more money from these exports to correct the whole defecit so this would not make too big an impact.

You cant do that if you want to remain in the EU.

[Bardissimo]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

Other countries may counter act and do the same for our exports thus not making a difference.In theory but not always in practise the idea is to make more money from these exports to correct the whole defecit so this would not make too big an impact.

fam, if every country did that with quotas trade would become a f*ckeries, im pretty sure there is some legislation stopping it cos then the nxt step wpuld jus be embargos alie?

[Trane]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

Other countries may counter act and do the same for our exports thus not making a difference.In theory but not always in practise the idea is to make more money from these exports to correct the whole defecit so this would not make too big an impact.

fam, if every country did that with quotas trade would become a f*ckeries, im pretty sure there is some legislation stopping it cos then the nxt step wpuld jus be embargos alie?

Yea there is.

[Superstition]

Fiscal policy: import restrictions (taxes/quotas) and export encouragement (subsidies/exemptions)Monetary policy: increase money supply (depreciate domestic currency)

Other countries may counter act and do the same for our exports thus not making a difference.In theory but not always in practise the idea is to make more money from these exports to correct the whole defecit so this would not make too big an impact.

Valid game-theory objections aside, everybody already mentioned the exchange rate/interest rate mechanism so I was mentioning fiscal alternatives too.And I know that Jamal. Its a theoretical econ queston about understanding the balance of trade, not a political one

[Aza T]

Also for more marks u can draw a diagram: Draw the J-Curve.

[Bardissimo]

Also for more marks u can draw a diagram: Draw the J-Curve.

the LRAS curve or am i clueless...

[I.B.Blackman]

More: How do you depreciate a currency using monetary policy?

[Rippy]

'Loose' monetary policy lowers the interest rate, so therefore lowers the exchange rate.

[I.B.Blackman]

safe