Macroeconomics

‭improvement‬ ‭in‬ ‭the‬ ‭quality‬ ‭of‬ ‭domestic‬ ‭products‬ ‭and‬ ‭a‬ ‭drop‬ ‭in‬ ‭their‬ ‭prices‬ ‭caused‬ ‭by‬ ‭these‬ ‭policies‬ ‭increases‬ ‭the‬ ‭demand‬ ‭for‬ ‭the‬ ‭country’s‬ ‭exports,‬ ‭and‬ ‭hence,‬ ‭currency.‬ ‭This‬ ‭increase‬ ‭in‬ ‭exports‬ ‭contributes to a reduction in the current account defcit.‬ ‭The‬‭government‬‭can‬‭also‬‭use‬‭trade‬‭restrictions,‬‭such‬‭as‬‭quotas‬‭and‬‭tariffs,‬‭to‬‭reduce‬‭imports‬‭and‬‭reduce‬ ‭the defcit. However, such measures may cause retaliation from trading partners.‬

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